Market Recap — Jan 7, 2022

L1s

Fantom roundtripped a 12% surge at midday, but otherwise the market took a breather from last night’s selling.

BTC is consolidating as well and bullish RSI divergence is starting to show on some lower time frames. A break above the local high around $43,600 should open opportunities to bid around the range low with a stops around $40,600. If we’re lucky enough to get that setup, the 4H supply just below the range high at $51,000 — $52,000 is the first target.

Solana Outages

Without a doubt, Solana had an outstanding year in 2021, growing its market cap from $84m in January 2021 to $53 BILLION by year end, topping out at $77bn on November 5, 2021, according to CoinMarketCap. By any metric, they done an excellent job drawing developer interest to the network. and Solana was one of the primary beneficiaries of the fee explosion on Ethereum, which offers fast and cheap transaction and plenty of dApps for users to leverage. Its success, however, has not come without controversy.

Solana experienced it’s first network outage on Sept 14, 2021 went Grape Protocol’s IDO on Raydium led to a surge in traffic, mostly due to bots flooding the system with transactions. It took 17 hours for engineers to fix the problem, which required a hark fork for the network to get back online. Fast forward to December, and Solana experienced heavy congestion that again led users to complain of a network outage when an IDO for an NFT game called “SolChicks” led to heavy congestion and dramatically slowed down confirmation times. So far, there have been four instances severe traffic greatly diminishing the highly touted speed of the Solana network, and two were just this week. In other words, it’s clear by this point that Solana network outages show some work is still needed.

More recently, several voices have come forward to raise issues with how some of the Solana leadership have handled these issues. Jason Bons laid out some issues a few days ago:

While I can’t speak to the technical points Justin raises, they do warrant consideration.

Does any of this matter? Well, my hunch is this is just a case of new technology, and leadership, going through iterations of learning. After all, the level of technical complexity inherent in any blockchain is staggering. That said, I just can’t help but get the feeling that after an incredible run in 2021 some issues may have been overlooked — especially since SOL is now the 5th most valuable coin by market cap and “only” 1/8th the size of Ethereum ($44.7bn for SOL vs $383bn for ETH).

For now, I’ll wait to see how all that shakes out with SOL. We may see another run up in price for SOL, but I think there are better options. For instance, Fantom, with a market cap of $6.7bn, is seeing “grassroots” adoption in a way that reminds some of Ethereum (I can’t remember where I read this so I can’t quote this, but will update if I find it). Meanwhile, ALGO, with a market cap of $9.4b, or 1/50th that of Ethereum’s, is an absolute bargain.

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