Arthur Hayes, the former CEO of BitMEX, recently expressed his bullish outlook on Solana (SOL), highlighting its potential for recovery and growth despite the challenges after the FTX collapse. His endorsement of Solana comes amidst its volatile market performance, yet he maintains his positive outlook that SOL is a good investment.The Solana ecosystem also continues to demonstrate robust activity and resilience.
Meanwhile, the BONK DAO is making strides by venturing into startup funding with a $500,000 investment in an early-stage fund aimed at nurturing new Solana projects.
Arthur Hayes' Bullish Bet on Solana
Arthur Hayes, the former CEO of BitMEX, recently shared his confidence in Solana (SOL), pointing out its potential for recovery and growth in the aftermath of the FTX collapse. Despite the downfall of FTX and the legal issues surrounding its founder, Sam Bankman-Fried, who was also a notable supporter of Solana, Hayes sees a very bright future for the cryptocurrency. He shared his optimistic outlook on Solana through a post on X, even suggesting it might be a good time to invest in SOL.
Hayes is very well known for his expertise in the cryptocurrency market and has a history of making accurate market predictions. In a recent essay, he discussed his investment strategy, highlighting a potential downturn for Bitcoin (BTC) and his approach to minimizing losses, including selling Solana and Bonk tokens. However, he mentioned his plan to invest in Solana and other altcoins if Bitcoin's price drops below $35,000, also proving his strong belief in Solana's potential for a strong comeback.
Solana's market performance has indeed been volatile, experiencing significant price swings. It surged in late 2023, followed by a correction in early 2024. Nonetheless, it still managed to maintain a price level that reflects investor confidence in its stability and future prospects. Hayes' previous bullish comments on Solana were followed by a price increase, suggesting that his latest insights could also lead to a positive market trend for the cryptocurrency.
Despite SOL’s Price Decline, Solana Shows Robust Network Activity
SOL has seen a notable decline in its value, dropping by 9.8% between Jan. 30 and Feb. 1, and failing to break past the $104 resistance level for the fifth time in a four-week span. This decline is part of a broader 10.7% drop over the past 30 days, which contrasts with the relatively smaller declines seen in Ethereum (ETH) and BNB, which fell 1.2% and 2.6% respectively. The underperformance of SOL has now led investors to start questioning its value, especially in light of its solid network fundamentals.
It is important to keep in mind that the broader cryptocurrency market has been under pressure since Jan. 31, after the U.S. Federal Reserve's decision to maintain interest rates at 5.25%. This decision was influenced by the ongoing inflation concerns and the desire to see a much more sustainable approach towards achieving a 2% inflation rate. The Fed's decision also raised concerns about the potential for a crisis among U.S. regional banks, which are struggling due to their fixed-income portfolios yielding below the current interest rate.
One significant example of this banking stress is New York Community Bancorp's (NYCB) 42% share price drop since Jan. 30, after it reported a $260 million loss for the fourth quarter of 2023. NYCB acquired Signature Bank, a crypto-friendly bank that was shut down by the New York Department of Financial Services in March of 2023. This situation heightened concerns about contagion risk within the financial and cryptocurrency sectors, with well known people in the industry like Arthur Hayes predicting a potentially negative impact on Bitcoin, followed by a positive outcome for cryptocurrencies if the Fed opts for a stimulus package.
The underperformance of SOL, when compared to its competitors, can be attributed to a number of things. Despite matching BNB in market capitalization at the $104 price point, Solana's total value locked (TVL) and decentralized application (DApp) activity lag behind BNB's. BNB's DApps have seen much higher engagement and transaction volume, with its total active addresses and 30-day volume vastly outstripping those of Solana.
However, Solana has seen positive developments, like the successful Jupiter (JUP) airdrop, which contributed to a surge in network demand, including increased activity in decentralized exchanges, NFT marketplaces, yield protocols, games, and liquid staking solutions.
Despite these successes, and even excluding the inflated activity from the Jupiter airdrop, Solana's ecosystem has shown signs of growth with great user increases in several DApps.
BONK DAO Ventures into Startup Funding
It is not just Arthur Hayes who believes in the Solana ecosystem’s potential. The BONK meme coin, originally launched as a light-hearted initiative to redistribute wealth within the Solana ecosystem after FTX's collapse in late 2022, has taken a big turn in its journey.
A year after its inception, not only has the value of BONK increased, but it has also evolved into an unexpected role: an investor in a venture fund. The Bonk DAO, a council of twelve influential figures within the Solana community, managing $124 million in BONK tokens, has recently decided to allocate $500,000 from its treasury to invest in an early-stage startup fund dedicated to fostering new projects on Solana. This decision was made through a governance vote that concluded in favor of the investment.
The venture fund in question is organized by Colosseum, a new startup accelerator led by Matty Taylor, the former head of growth at the Solana Foundation. Colosseum aims to initiate hackathons that will generate fresh projects for the Solana ecosystem, a responsibility recently transferred to it by the Solana Foundation.
BONK DAO's journey began with the creation of the BONK token in 2022, where over 15% of all BONK tokens were allocated to the DAO for community project management and investment. Currently, the DAO is the largest holder of BONK tokens, possessing more than 12% of the total supply.
Since its establishment, the DAO has actively engaged in supporting the Solana ecosystem through various initiatives, including hackathon sponsorships and investments in liquidity pools and DeFi partnerships. The recent investment in Colosseum will be its first venture into direct venture funding. Furthermore, the DAO is also considering a separate proposal to convert BONK into USDC through a trading partnership with STS Digital.
