Solana – A Lesson In Decentralization

Collateral Damage

Solana fans must be extremely disappointed as the FTX debacle continues to haunt and decay a once flourishing ecosystem. Next to ETH, Solana was primed for greatness and mass adoption. It’s no secret that Sam Bankman-Fried’s endorsement and investment in Solana helped propel the blockchain into the Top 10.

However, that is no longer the reality. SOL has been on a steady collapse and is about to fall out of the Top 20. Solana is a classic case of collateral damage and reveals exactly how destructive centralization can be. It is important to note that this is all unfolding due to “association” and a lack of decentralization. There are pros and cons to everything.

Relying on strong backing via VCs and other heavy hitters is great until something goes wrong. A more decentralized distribution of SOL would have rendered FTX’s collapse a lot less catastrophic. Sadly, this is not the case. FTX acquired a large portion of Solana’s circulating supply, ultimately, holding the chain captive.

How far Solana continues to fall is anyone’s guess. My first expectation is between $5 and $7. However, depending on how badly the development on the chain continues to deteriorate, a dollar is also realistic. Fortunately, this collapse hasn’t affected me. I picked up my first SOL under a dollar and have been short for much of this collapse.

I am still short. The past 24 hours have really put some amazing distance between my entry and the current price. I usually adjust stop losses once a position is in profit. This ensures that an unexpected move contrary to my position cannot steal my gains or plunge me into a loss. Trading 10X can do that very quickly, especially in Crypto.

Ethereum Is Worse

The centralization of Solana has been its downfall, where once it was actually its glory. However, Ethereum is now a lot more centralized than Solana. As I have mentioned, my exposure to ETH from here on will be minimal. I managed a decent buy during the covid crash at approximately $100, so I am pleased with my time in Ethereum.

As I have also mentioned, I exited the majority of my ETH between $4500 and $3500. I am not that concerned about the current layer 1 blockchains. I am choosing to watch from the sidelines. Very modest accumulation however continues for Cardano and a few others. Blockchains like Hive, Ravencoin, and other under-the-radar projects are gaining my attention.

Ethereum is much like Bitcoin now, the real gains have been realized. A lot of investors talk about when Ethereum will hit $10K. That’s not even a 10X. I enjoyed 35X to 45X on ETH during the last bull market. I am not going to get that again. So, I am looking elsewhere.

Final Thoughts

There is a lot to take away from the Solana collapse. It is equally important to meditate and consider scenarios and situations. There are too many hot-headed investors in this space. Take a step back, relax, and consider your next steps from here.

This also applies to trading. Overtrading is a very real problem for many traders. A calm and thoughtful approach gives you an unparalleled advantage. Until the next one, stay the course!

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