Before Solana (SOL), blockchains recorded transactions without reference to time. However, Solana built a decentralized clock into its blockchain with its innovative Proof of History architecture, proving that a fast, secure, and scalable blockchain is possible without the need for Layer 2 solutions. Built for the creation of decentralized apps and designed for global adoption, the Solana blockchain boasts a capacity of 50,000 transactions per second with a sub-second block time and an average transaction fee of $0.00025.

SOL is the native coin of the Solana blockchain and is used to pay transaction fees and for staking. Since joining the crypto market, the price of SOL has seen dramatic change and if you want to know why then you’re in the right place. We’ve compiled everything you need in order to get a better understanding of SOL price – as well as the factors which influence it.

Solana Price History

Following an initial coin offering in March 2020, SOL began trading the next month at about $0.22. It hit $1 and surged towards $1.50 on its first day, but dropped back to $0.50 before the month was out. After a couple of months of consolidation, the coin began to rally in June. It traded above $4 in August, then retraced more than 35% to under $2.70. The surge resumed later in the month, culminating in a peak of $5.10 at the start of September.

Over the next few days, prices crashed 60% to about $2, falling further during the following months until hitting a low of $1.02 in December. By the end of the year, SOL had improved somewhat to $1.51, representing a decrease of 70% since the September peak but still providing gains of 586% since launch.

The new year got off to a good start as SOL price tripled during the first month of 2021. This was also when the Solana market cap surpassed $1 billion for the first time. After almost reaching $19 in February, prices pulled back to below $12 and consolidated for the next month.

The rally resumed in March and SOL hit $50 for the first time in April. After three weeks of sideways and downward movement, another burst of positive momentum carried SOL up to its all-time high of $61.44 on May 18. By that point, Solana had a market cap in excess of $15 billion. This was immediately followed by a crash of more than 50% during a single day and SOL hit a low of about $19 a few days later. Prices climbed after that and by June, SOL had regained $40.

Analyzing Solana Price History

[guidelink sol] price history can be analyzed with many of the same techniques as the stock market. Technical analysis involves using various indicators while studying price charts in order to make sense of previous price movements. With SOL, as with many other tradable assets, large price swings are often accompanied by spikes in trading volume, as a large number of traders buy or sell their coins on exchanges.

Fundamental analysis, on the other hand, looks at the finances and activities of a company, as well as the state of the wider market and economy. Solana Labs, the company that built the Solana blockchain, raised more than $25 million through the SOL ICO and raised an additional $314 million through a private token sale with well-known backers including Andreessen Horowitz, Alameda Research, and ParaFi Capital. The blockchain already hosts a wide range of projects, such as Serum, Audius, and Maps.me, and as of June 2021, Solana ecosystem projects have collectively processed more than 19 billion transactions on-chain. These could potentially be good signs for the fundamental Solana value.

Broader market trends have also played a role in the price history of SOL. Its surge early in 2021 wasn’t unique – the entire crypto market pumped around this time. Bitcoin was in the midst of a major bull run then, and with such strong market dominance, any significant price movement for Bitcoin often impacts other cryptocurrencies.

The sudden crash in May 2021 was also market-wide, affecting every single major cryptocurrency. Various contributing factors have been suggested, including comments made by Elon Musk, a crackdown by Chinese authorities, liquidations, and a healthy market correction.

The overall price trend of SOL tends to follow what’s known as a boom-and-bust cycle. This is a pattern in which a period of growing excitement leads to a surge in price before doubt and disillusionment set in and result in a crash.

Factors Influencing The Price of Solana (SOL)

A variety of different things can affect the market price of SOL, including project news and developments, the flow of assets on exchanges, public sentiment, and emerging trends in the wider crypto and global economies.

SOL launched with an initial total supply of 500 million SOL but has no capped max supply. As of June 2021, Solana has an inflation rate of 8%, which will reduce by 15% each year until it reaches its stable, long-term inflation rate of 1.5%, projected to happen in 2031. This increasing supply puts downward pressure on the price of SOL and means an increasing price requires demand to rise faster than supply.

However, a portion of each transaction fee, initially set at 50%, is burned. This means a greater transaction volume will slow the rate at which the circulating supply increases. Also, the other half of the transaction fee is paid to Solana network validators, along with a large portion of the SOL tokens issued via inflation. Those who don’t wish to set up a node can still participate by delegating their SOL to a validator. The rewards paid to validators and stakers could drive up demand for SOL by incentivizing more people to buy SOL for staking.

As SOL is required to pay transaction fees on the blockchain, there is further demand from developers and users within the ecosystem. FTX chose to launch its non-custodial decentralized exchange Serum on Solana, which surpassed $4 billion in trading volume in May 2021. By then, the Solana ecosystem comprised more than 180 projects. Demand for SOL should increase as the ecosystem expands and its projects gain more users. Project improvements, new partnerships, and community engagement efforts by either Solana or Solana ecosystem projects could therefore boost the price of SOL.

Live Solana Value and Market Cap

The market price of SOL varies from moment to moment as it’s dictated by the balance of buyers and sellers on exchanges, which is in constant flux. 

Given SOL’s volatility, its current price can change by a large amount in a very short space of time. The market cap of Solana is equal to the price of SOL multiplied by the number of SOL in the circulating supply.

Solana Price FAQ

How is the price of SOL calculated?

SOL’s price at any given time is decided by the balance of supply and demand on exchanges. When more people are buying SOL than selling it, the price goes up, and when more are selling than buying, the price goes down.

Why is the price of SOL different on each cryptocurrency exchange?

SOL’s price is based purely on trading as there is no standard global Solana price, so no one knows what it is “supposed” to cost. The trading volume and liquidity are different for each exchange and those differences are what affect the price.

What will SOL be worth in the future?

It’s impossible to make price predictions with any kind of absolute certainty, as a whole host of different factors could play a role in determining the future Solana value. However, if more projects choose to build on Solana in the future and existing projects like Serum gain more users, SOL price could see an increase.

Conclusion

The price of SOL has seen dramatic change since the coin joined the market, going from lows of well under $1 to highs of more than $60. However, the journey hasn’t been smooth as SOL’s volatility has led to surges and crashes along the way.

Many different factors have played a role in determining the price of SOL, including demand from stakers, the number of apps and users on the network, and trends in the rest of the cryptocurrency market and wider economy. Its current valuation is derived from the balance of supply and demand in the markets and constantly changes.

If you want to get started with the most user-friendly trading experience on the market, register with Kriptomat today to begin your journey into the world of Solana and cryptocurrencies!