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Why I'm Buying Solana at a 36% Discount to Its High

By Chris MacDonald and Eric Bleeker – Updated Jan 3, 2022 at 4:03PM

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Solana's on sale, and now may be the time to buy.

For top cryptocurrencies such as Solana (SOL -2.39%), this recent volatility in the markets may be a great buying opportunity. Here's the discussion between contributor Chris MacDonald and The Motley Fool's Eric Bleeker on the Dec. 15 edition of "The Crypto Show" on Backstage Pass.

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Chris MacDonald: Solana is a cryptocurrency that's dropped a little bit more, 36 percent off of its highs. For me, Solana is one of the ones that I'm probably more bullish on from a longer-term perspective in terms of growth in the DeFi space.

One of the reasons why Solana has so much upside is, its transaction speed and its low fees. Those have been the two things that investors have focused on.

Now, one of the reasons why it's down so much of late is there have been some pretty significant slowdowns on the network. I covered some of the issues with Solana in a recent piece. There's a lot of debate right now as to whether security issues are really behind the decline or if it was an NFT-related decline because Solana has seen so much interest from its NFT releases of late.

There are some that are saying, well, it's a good thing that there's some slowing of the network because it means that there's so much interest in Solana as the place that people want to go to buy NFTs, for example, or work on DeFi projects.

Then there's other people that are saying, well, if the network is that unstable and could potentially crash, that's a risk to consider.

There's a lot of back and forth on it right now. Right now it's trading at a discount for that reason. I think taking a longer view of Solana as an Ethereum competitor, which I do think it is. This is a compelling level to buy it at, right now.

Eric Bleeker: Yeah, and I think there's two key points from what you were just referencing.

The first is, you see so much when people are talking about crypto projects, talking about theoretical ideas as if they are locked in. What Solana's going through right now is taking its theoretical concept of how many transactions it can handle and actually having to put real-world experience behind it. Sometimes all these technology dreams do not work and you need to go through scaling to see what works and what doesn't.

Second, Solana as well, I believe it was up [LAUGHTER] 150x in the past year or something like that, so when you do see de-risking, generally the stocks that had risen the most, have a propensity to drop. I think you are also seeing an element of that on Solana as well.

Chris MacDonald owns Solana. Eric Bleeker has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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