Back when Solana (SOL +1.11%) cost less than $10 I bought several dozen, knowing very little about the cryptocurrency but liking the fact it had a use case revolving around apps and non-fungible tokens (NFTs), which were making headlines at the time. Soon thereafter Solana's price rose modestly and I sold all but 10 Solana, making a modest profit but wanting to free up the liquidity for other, more active cryptocurrencies. Much to my surprise, Solana later soared, skyrocketing above $240 and giving the remaining 10 coins a value close to $2,500. Here's why I'm not selling them yet.
Selling picks and shovels in a gold rush
Much like an entrepreneur selling equipment to speculators rather than panning for gold himself, Solana's blockchain is designed to support other digital developments. These include apps, constructs related to financial services, and rapid, cheap transfers and transactions for other cryptocurrencies.
Image source: Getty Images.
It claims to provide decentralized architecture that is extremely resistant to censorship. The market certainly appears to believe in its utility and the validity of its claims, with an approximately 12,000% gain registered this year by the cryptocurrency.
Solana's support for NFTs may be one of its biggest advantages. While I'm not an expert on NFTs, I believe these tokens may have wide potential beyond their current uses. Most people associate non-fungible tokens with what amounts to digitally signed works of art -- jpegs, animations, short video clips, fragments of text, digitized baseball cards, and the like -- a few of which have fetched hundreds of thousands or millions of dollars, while most remain mired in worthless obscurity.
However, there are many potentially highly important uses for NFTs, ranging from ironclad verification of digital business documents and "smart contracts," to games, to a transformation of the music industry via decentralized "fan funding" of musicians, eliminating middlemen in the process.
Solana appears fairly stable -- a springboard for more gains?
All cryptocurrency is extremely volatile, and commentators who use terms like "floor" or "established resistance" are mostly just using official-sounding phrases that don't accurately apply in a technical sense to cryptocurrency's mercurial movements.
Nevertheless, Solana rose above $100 in late August, touched $200 briefly in early September, and has largely stayed above $200 since mid-October. This is no guarantee it won't drop at some point in the future, but it seems to have established a value in the low hundreds as a relatively stable price point for its current applications. It may dip lower temporarily, but it hasn't crashed back to its pre-August price in the manner of a "pump and dump" as was apparently the case with the notorious Dogecoin (DOGE 0.17%) and its abortive summer 2021 launch "to the moon."
If NFTs achieve much wider use outside signed pieces of digital artwork or photography, a potential they may realize within the next few years, another tenfold rise in Solana's value seems possible, even probable. And, given the unpredictability of cryptocurrency, there's also the chance Solana will rise sharply, perhaps five times or 10 times, much sooner, just as the jump to more than $240 caught me by surprise a few months ago.
That's why I'm holding my remaining 10 Solana for the long-term, even though I could sell them at a profit right now, and why I think the cryptocurrency may well have bullish upside in the next one to three years.
