A significant drop in DEX trades and a surge in failed transactions have brought the price of Solana (SOL) to a critical crossroads. Using on-chain metrics and technical analysis, we figure out what to expect from altcoins in the near future.
Solana technical problems continue
The growing interest in Solana as the blockchain of choice for launching and trading new memecoins has a two-way effect. However, the noticeable increase in network activity led to a surge in failed transactions, worrying both users and developers.
After peaking at 8.5 million transactions on DEX on March 30, the figure has dropped to 5.6 million, indicating possible technical difficulties and growing frustration among traders. The average directional index (ADX) of SOL rose from 9 to 36, highlighting the growing strength of the downtrend and setting the stage for further price decline.
SOL price forecast: Possible collapse to $137
Recent technical patterns, including the death cross, coupled with falling transaction numbers and a strong ADX, paint a bearish picture for SOL. Moreover, If the trend continues, SOL price may test the $167 support level and fall to $137.
However, if the developers manage to resolve the technical issues effectively, the scenario may change for the better. In this case, the asset will potentially test the next resistance at $205 or even $210.
High Demand Behind The Network Challenges
In the past two days, SOL has faced some network congestion resulting in transaction delay or failure. As per the explanation provided by the network’s developers, the main issue causing network congestion has been identified to originate from a QUIC implementation and the behavior of the Agave validator client. On the other hand, Solana Strategy Head Austin Federa has spoken out about the network’s current network setback, pointing out potential progress is imminent.
Federa acknowledged the emergence of these setbacks, pointing out that the Solana network has been experiencing demand greater than that of other networks. In Federa’s view, this is a stress test for the entire Solana ecosystem and a type that cannot be replicated in simulation. He tried to elaborate on how every network goes through a phase like this at some point or another.
Solana sees traffic and demand that no other network has ever come close to — it’s a stress test of the whole system. These are exactly the type of stress tests you cannot model in simulation, you have to just see how stuff works in prod and adapt.
The scaling and bug squashing…
— Austin Federa | 🇺🇸 (@Austin_Federa) April 6, 2024
The Solana Strategy Head referenced the case of CryptoKitties on Ethereum and Ordinals on the Bitcoin blockchain. In the long run, facing the congestion and resolving it is bound to enhance the Solana system, as per Federa’s statement. More importantly, he emphasized that Solana has consistently demonstrated its ability to overcome stress tests like this.
Solana plans a lasting solution
Federa empathized with those who have truly been directly affected by the network congestion, stating that the Solana team is working hard with the aim of fixing the problem.
In addition to this, the network glitches have also led the team of Solana engineers to collaborate with other core contributors in order to diagnose and troubleshoot the bottlenecks while increasing the overall network performance. Moreover, the core developers aim to start publishing the fixes on a weekly basis from next week.
