Another Solana Outage Shows That Price Impact Is Minor
After at least 9 days with reported outages so far in 2022, the price of solana (SOL), the 7th largest cryptoasset by market capitalization, does not appear overly affected by the network troubles, with prices for the most part staying rangebound between USD 80 and USD 120 since late January.
At 12:25 PM UTC, SOL traded at around USD 87 and was down more than 1% in a day and 12% in a week. The price dropped 35% in a month and trimmed its annual gains to 76%.
The multiple outages on the Solana network came back in focus again just this weekend, after an outage last Saturday and Sunday that was reportedly caused by bots trying to trade non-fungible tokens (NFTs) on the network.
The outage this weekend is the latest in a series of outages seen on Solana in January and April this year, in addition to some smaller outages in September last year. According to Solana’s own uptime monitor, the month of January had a 96.4% uptime, while April came in with an uptime of 99.6%.
Downtime in January:
Not surprisingly, the many unfortunate events are being discussed in the crypto community, with one Reddit user asking why anyone should invest in SOL when cryptoassets “with 100 percent uptime exist.”
A similar sentiment was also shared elsewhere, with for instance Eric Wall, Chief Investment Officer at Arcane Assets, hinting that the trouble with Solana shows why Bitcoin (BTC) is designed specifically to be simple:
With Solana going down today and Ethereum transfers spiking to $700+ in fees, yeah maybe it is good that bitcoin exists and is simple as fuck.— Eric Wall (@ercwl) May 1, 2022
Still, the price impacts of the outages have so far been relatively modest. Going back to early January this year, the price did see a small correction during the major outage from January 6 to 12. However, other days have seen much stronger price falls, including a more than 30% fall between January 20, 21, and 22 unrelated to any outage.
Meanwhile, during the latest outage that started on April 30, the price of SOL dropped by approximately 10% over a 24-hour period, before trimming some losses on May 1 – a relatively minor price impact considering the major consequences of an outage can have for users.
SOL price in 2022 with reported outages marked:
– DeFi Transactions at One-Year Low, NFTs and Games Standing Strong
– ‘Challenges’ to Crypto Traders as Lower Volatility Expected; Solana Derivatives Wanted
– Solana’s Network Congestion Prompts Liquidations, Drives Away Users
– OpenSea Now Supports Solana NFTs in Beta
– Ethereum Co-Founder Raises USD 450M & Bashes Solana