Most cryptocurrencies have suffered substantial sell-offs this year, and many top tokens have seen their valuations crushed as the market has entered a new bearish phase. Shiba Inu (SHIB 3.56%) and Solana (SOL 4.89%) are both down more than 85%, and they could see explosive gains from current pricing levels if the underlying technologies or the crypto market emerge from current pressures for another bullish run.
Which of these cryptocurrencies is the better buy right now? Read on to see why two Motley Fool contributors disagree on the question of which token is likely to deliver better returns.
CRYPTO: SHIB
Key Data Points
The case for Shiba Inu
Adria Cimino (Shiba Inu): Shiba Inu soared 45,000,000% last year. But today, this popular meme token actually presents a better investment case -- more on that in a minute. But first, let's look at Shiba Inu's situation about a year ago.
Image source: Getty Images.
Shiba Inu's supporters -- the Shib Army -- pushed it into the forefront across social media. But Shiba Inu's use cases were pretty limited. That hasn't changed much. Shiba Inu still runs on Ethereum and is mainly used as a means of payment.
But here's what's next. Shiba Inu is working on two potentially big catalysts. The cryptocurrency is developing a layer-2 scaling solution called Shibarium. Once it's ready, Shiba Inu will migrate to this platform. The advantage? It will no longer be held back by the hefty transaction fees associated with Ethereum. So transactions will get cheaper and faster.
The second big thing for Shiba Inu is the creation of its own metaverse. Shiba Inu launched the metaverse this spring. It made more than 30,000 plots of virtual land available for purchase. But the plan is to eventually sell more than 100,000 lots. Landowners will have the opportunity to earn passive income, collect resources within the game, and earn rewards.
All of this is positive. But it's crucial to remember Shiba Inu remains high risk. Even with the upcoming catalysts, Shiba Inu doesn't stand out from other crypto players. So, it may never produce significant and lasting gains.
Still, considering Shibarium and the metaverse, if there's ever been a time to be excited about Shiba Inu, it's probably now. The token has lost more than 60% so far this year. It may not be easy or even possible for Shiba Inu -- trading at a fraction of a cent -- to reach $1. But excitement about the new projects could help Shiba Inu recover some of its lost terrain. And that could be a win for those who invest today.
Solana's network strengths could power gains for its token
Keith Noonan: Solana provides a network for building and running decentralized finance applications, payment systems, and video games -- with its SOL token being used as a currency to pay for transactions on the network. Developers can also use the Solana network for non-fungible-token (NFT) projects, a category that has fallen out of favor recently after an initial surge of hype. The collapse in demand and interest surrounding NFTs has likely played a significant role in the SOL token's valuation collapse, but the cryptocurrency could go on to see significant gains from current levels even if interest in non-fungible tokens never recovers to previous levels.
CRYPTO: SOL
Key Data Points
Solana's blockchain is significantly faster than most of its competitors and is able to process up to 60,000 transactions per second. It could eventually make significant gains beyond that level. The network also offers relatively inexpensive transaction fees, and fee rates tend to be relatively stable. The combination of Solana's transaction processing capabilities and fee structure make it an attractive foundation for apps. If the network continues to attract new application projects and those projects continue to scale, it should create positive pricing catalysts for the SOL token. The cryptocurrency could also see big gains in conjunction with a bullish recovery for the broader crypto market.
Even with Shiba Inu's associated metaverse project potentially strengthening its fundamental valuation case, the token is still primarily a speculative investment vehicle. It doesn't have much that helps it stand out in the crypto market aside from a strong brand and dedicated base of supporters -- advantages that could disintegrate fairly quickly. Solana's fundamentals look much stronger than Shiba Inu, and I think that the SOL token is the better play for most investors.
So which cryptocurrency is the better buy?
Even after big sell-offs over the last year, most cryptocurrencies are high-risk, high-reward investments. If fundamentals are the key criteria in shaping your crypto purchases, Solana has a clear edge over Shiba Inu and would be the better buy. But if you think Solana will be eclipsed by competitors or view Shiba Inu's layer-2 transition or metaverse as major positive catalysts, it makes more sense to go with the Shiba Inu token.
