Investors bearish on Solana [SOL] as continued outages stem momentum
- Since the outage on 25 February, Solana dropped by over 3% until press time.
- A Twitter user pointed out that the repeated outages could be due to a design flaw.
According to a tweet by Santiment, Solana’s [SOL] social volume reached a six-month high after the chain was hit by yet another network outage recently. Moreover, significant FUD gripped the community even as words like ‘concern’ and ‘outage’ were frequently used in tandem with SOL in recent days.
😯 #Solana is a trending topic in #crypto with associated words like #concern. Why? Over the weekend, $SOL went 20 consecutive hours without a single successful transaction. Outages like these have historically caused short-term #FUD from panic sellers. https://t.co/PQ7Iadxe0O pic.twitter.com/Gmio62mwBh
— Santiment (@santimentfeed) February 28, 2023
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Santiment added that disruptions like these have triggered panic selling in the past. But should SOL holders be worried?
Outages are not helping SOL’s cause
Since the outage on 25 February, Solana dropped by 3% until press time, data from CoinMarketCap revealed. SOL’s drag was more prominent over the last seven days, during which it declined by 11%.
A look at Santiment’s data showed that the trading volume diminished significantly, a 65% drop since the weekly peak on 20 February.
The dip in trading activity could be due to declining investor sentiment, which was deep into the negative territory at the time of writing. On the other hand, the development activity rose sharply, indicating that developers were continuously polishing and upgrading network features.
According to Coinglass, the number of long positions for Solana was less than short positions, implying that bulls were averse to betting on the coin. The Longs/Short Ratio steadily declined over the last 10 days.
SOL’s Open Interest (OI) declined and matched the trajectory of its price, per data from Coinalyze. A declining OI in a falling market was a bearish signal as more long-term holders were liquidating their positions.
Realistic or not, here’s SOL’s market cap in BTC’s terms
Solana’s tainted history
Solana suffered its first major network outage of 2023 in the last week, which lasted for nearly 20 hours.
But tech disruptions for Solana aren’t a new phenomenon. It was hit by several network outages in 2022 as well. In an interview, Solana co-founder Anatoly Yakovenko termed network outages as Solana’s curse. Most network outages were caused after validators struggled to process transaction loads during peak hours.
1/Yesterday #Solana had another 20 hour outage 🤯
Just one of about a dozen times the ⛓️ has gone down. But why? 🤔
All part of a massive design flaw that I will try to break down in this 🧵
So let’s get into it… pic.twitter.com/KmeUPnnlZJ
— DBCryptoX ⚡️ (@DBCrypt0) February 26, 2023