Guy Turner, a prominent crypto analyst and the co-host of the Coin Bureau, delves into the potential and developments of Solana (SOL) in a recent video update.
Turner kicks off the video by acknowledging the cryptocurrency community’s anticipation for which large-cap altcoin will follow Bitcoin’s lead in hitting a new all-time high. He claims Solana appears to be a strong candidate due to its resilience over the past few months and its proximity to achieving significant milestones that could lead to another substantial price breakout.
Before diving into the specifics, Turner makes it clear that the video is meant to be educational and not financial advice. He discloses that many members of the Coin Bureau team, including himself, hold Solana in their portfolios but assures viewers that the analysis will remain objective.
Turner says that one of the significant updates since the last coverage involves Solana’s Wormhole Bridge, which announced a successful fundraising of $225 million. He mentions that this bridge is notably known for a hack in 2021 that resulted in a loss of over $320 million. Jump Crypto, the owner of the bridge, apparently injected the same amount to keep it operational. Turner mentions Coin Bureau’s prediction from their Pyth Network review that Wormhole would launch its own token. This prediction came true when Wormhole announced an airdrop of its W token to early adopters and developers.
Turner highlights that in December 2023, the Solana Foundation announced the Pith Network’s experimentation with permissioned environments on its Pythnet blockchain, which is essentially a permissioned version of Solana. This development suggests an expanding ecosystem and potential for institutional adoption, a significant point given Turner’s disclosure of holding PYTH.
Turner also talks about the emergence of memecoin mania on Solana, spearheaded by the Bonk ($BONK) token, which catalyzed a surge in interest and sales for Solana’s Saga phone.
Turner says Circle’s issuance of its Euro stablecoin on the Solana blockchain and New York Regulators’ green light to Paxos for asset issuance on Solana signal institutional interest in Solana as a viable alternative to Ethereum, despite Solana’s historical congestion and outage issues.
Turner goes on to say that the launch of spot Bitcoin ETFs in the U.S. has led to speculation about a potential spot Solana ETF. Asset manager Franklin Templeton tweeted about Solana’s strengths, fueling this speculation. However, he also points out that Bloomberg ETF analyst James Seyffart has expressed skepticism about a spot Solana ETF materializing in the near future, especially given the SEC’s classification of $SOL as a security in lawsuits against major exchanges, such as Coinbase.
Turner also noted another interesting development: token extensions on Solana, launched back in January, which are aimed at institutional adoption with compliance and privacy features. However, per Turner’s words, this positive development was overshadowed by a significant outage in February, the first in almost a year, which raised concerns about Solana’s reliability among institutional investors.
Binance and Coinbase’s temporary suspension of Solana withdrawals due to congestion highlighted ongoing scalability challenges. This congestion, exacerbated by memecoin popularity, was partly attributed to Solana’s Maximum Extractable Value (MEV) functionality, which allows validators to rearrange transactions for profit, potentially leading to transaction delays.
Recent discussions among Solana validators, highlighted by Turner, reveal concerns over the removal of this feature. Turner says this has led some validators to explore alternative software solutions or even develop their own to reintroduce MEV, indicating potential future challenges for the network.
Turner points out Franklin Templeton’s bullish stance on Solana, evidenced by a research note suggesting memecoins could drive user adoption. This perspective, he suggests, underscores the role of memecoin rallies in enhancing Solana’s visibility and user base. Remarkably, according to Turner, Solana has reportedly surpassed Ethereum in DEX trading volume, a sign of its growing influence and adoption, despite skepticism regarding its ability to outpace Ethereum in consumer applications.
The $SOL price has experienced significant growth, attributed to memecoin hype and a surge in user activity and transactions. Turner says on-chain data, including Phantom wallet downloads and the number of Solana accounts, indicate exponential adoption levels reminiscent of the 2021 bull market. He believes this trend is further supported by activity on Solana’s Radium DEX and the Magic Eden NFT marketplace, reflecting a resurgence in Solana’s NFT ecosystem.
The Coin Bureau host says the demand for $SOL, driven by speculation in memecoins and NFTs, has introduced substantial buying pressure. Conversely, he notes, an increase in $SOL’s supply over recent months has presented potential sell pressure. Despite this, Turner thinks that the $SOL token’s price resilience suggests either overwhelming buying pressure or moderated selling activity. Turner’s analysis highlights the substantial financial flows into memecoins and speculates on the motivations of crypto whales in the current market environment.
Turner provides a bullish outlook on $SOL, noting its potential for significant gains, especially when analyzed against Bitcoin (BTC). He claims that technical analysis on multiple timeframes suggests that $SOL could surpass the $300 mark, contingent on broader market movements, particularly BTC’s performance leading into the Bitcoin halving.
Turner discusses Solana’s de facto 2024 roadmap released on January 11, outlining four key milestones:
- Token Extensions: Already implemented shortly after their announcement, aiming for institutional adoption with compliance and privacy features.
- New Validator Clients: The introduction of Firedancer, a client expected to significantly enhance Solana’s speed. Although initially expected in the first half of the year, the release is now anticipated around the next Breakpoint conference in September. This upgrade could, according to Turner, potentially be a bullish catalyst for $SOL, possibly driving its value above $300.
- Institutional Support: The roadmap hints at unspecified institutional support, suggesting that enterprise-level tools for building on Solana are now in place. This development aligns with Solana’s ambition to serve as a decentralized NASDAQ.
- More Mature Building Ecosystem: The Solana Foundation encourages developers to leverage Solana’s toolkit to create diverse applications, focusing on gaming, DAOs, permissioned products, infrastructure, payments, and interoperability.
An additional milestone involves an upgrade to address network congestion issues, scheduled for mid-April, which may incorporate some form of MEV functionality. Moreover, discussions around a new governance structure are underway, indicating ongoing efforts to refine Solana’s organizational framework.
Turner outlines several challenges Solana may face:
- Regulatory Scrutiny: The SEC’s investigations into the Ethereum ecosystem could foreshadow similar scrutiny for Solana, especially given its classification as a security in legal actions against major exchanges. Solana’s reliance on favorable US crypto regulations presents a precarious position, given the uncertain regulatory landscape.
- Antitrust Concerns with Pyth Network: The direct feeding of Pyth Network’s data to Solana, compared to the lagged feeds to other blockchains via the Wormhole Bridge, could raise antitrust issues due to potential unfair advantages. Addressing this concern would require Pith Network to directly feed data to other blockchains as well.
- Reliability Issues: Solana’s history of outages may deter institutional investors, despite upgrades like Firedancer aiming to enhance network robustness. The effectiveness of these upgrades in improving reliability remains to be seen.
Turner emphasizes that Solana’s ability to reach or surpass the $300 mark heavily depends on the successful implementation of its roadmap milestones and the broader market’s reception, especially in the context of the upcoming Bitcoin halving.
Featured Image via Solana Labs
