Solana May Not be as Insulated as You Might Think

In the wacky wonderful world of cryptocurrencies, it’s entirely possible that Solana (SOL-USD) could rise higher.

Solana Crypto currency Gold Solana SOL. Close up on white background Blockchain concept 3d rendering
Source: pasit chomying / Shutterstock.com

Throughout the trailing year and some change, we’ve seen cryptos suffer devastating losses, implying that the great bull market was over. But then, out of nowhere, a surge of bullish sentiment enters the arena, driving up valuations for the blockchain sector.

On various social media platforms over the last several weeks, I encountered a growing number of fatalistic posts. Some proclaim that they’ve accepted the reality that whenever they acquire a particular crypto, it will go down in value. When they decide to sit out, it will instead rise.

Having suffered through such circumstances before, I’m in no mood to make overtly strong pronouncements of Solana in whichever direction. Still, I have my concerns.

A New World Order for Solana

Of course, the devastation that’s currently impacting Solana is the same negative catalyst that’s afflicting almost every other asset class: Russian President Vladimir Putin.

As I write this, Americans are waking up to a new world order, one where pure military might determine international relations. Unfortunately, such actions undermine human progress that, you know, were learned from centuries of brutality.

We found a better way through diplomacy and Putin decided to toss that all aside for his selfish reasons.

Yes, you will hear arguments that NATO’s potential expansion is the reason for Putin’s “special military operation.”

But then, don’t individual sovereign nations have a right to determine their culture and way of life? We don’t invade Mexico because it elects a president that Washington doesn’t care for.

Flashpoint Runs Counter to Decentralized Ethos

The unfortunate point about the recent military action unprecedented in modern Europe is that it imposes severe instability in the global economy. Sure, Solana investors — and crypto traders overall — understand that volatility is the name of the game. But it’s the name of the game for a specific subsegment of the capital markets.

When the infrastructure of capitalism shakes to its core? That’s the kind of volatility that can render anything — stocks, bonds, yes even an advanced crypto like Solana — moot. Let’s hope it doesn’t get to that point.

But another aspect that’s worrisome for the blockchain sector in general regarding this military incursion is that it runs counter to everything decentralized protocols and applications stand for. Why bother implementing a trustless mechanism of trading between borders when you can just simply invade?

In that scenario, it really doesn’t matter how much speed, scale and security you can bring to the table — and let’s be fair, Solana brings plenty to the table. However, when the person sitting across that table from you is holding a gun to your head, the mechanisms of decentralization don’t seem very effective.

In one fell swoop, Putin destroyed the concept of decentralized ecosystems, along with the rule of law.

This Time Might be Different

With all that has transpired over the last several hours, I can’t help but think of those infamous words in investing: this time, it’s different.

To be clear, I don’t know if this will indeed be different. However, I’m not banking much hope on Solana — or most other cryptos — from bouncing higher and sustaining the rally from the latest malaise. True, cryptos have come back from devastating losses. But we’re now talking about an invasion of a sovereign country.

From a foreign policy perspective, it’s very possible that this Russian action imposed a paradigm shift. Therefore, I’m not planning on a soft landing for the broader virtual currency sector.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


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