Solana (SOL 7.41%) continues to be one of the surprise breakout performers of early 2023. Over the first week of the year, Solana is up a jaw-dropping 33.58%. That's quite a rebound for a crypto that was down nearly 94% in 2022. The big question, of course, is whether Solana can keep up this momentum throughout the rest of the year.
There are two key reasons why I think Solana can actually turn things around in 2023 after what turned out to be an absolutely miserable 2022.
Extreme value
First and most importantly, Solana has become an extreme value play in the crypto market. It's one thing for a silly meme coin to lose 94% of its value in one year; it's another thing entirely for a Layer 1 blockchain network once touted as "the next Ethereum" to lose 94% of its value so quickly. Right now, investors are basically saying Solana is worthless, which seems hard to believe. Solana is not just a cryptocurrency -- it is also a platform for decentralized finance, non-fungible tokens (NFTs), blockchain gaming, and the metaverse.
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While a few big names in the NFT world appear to be abandoning Solana right now, there is a lot to like about this crypto. For one, Solana is now the second-leading player in the NFT marketplace, and its performance in this key area has held up well, even in the face of the FTX (FTT) market meltdown. Moreover, according to crypto research firm Messari, the underlying fundamentals at Solana -- as measured by user base, network stability, and transaction activity -- were actually showing signs of growing strength heading into the final quarter of 2022, which is when the FTX drama started.
From my perspective, Solana has been unfairly punished for its links to FTX and its former CEO, Sam Bankman-Fried. As soon as investors found out that he had promoted and financed Solana, the crypto went into free fall before finally stabilizing around the $10 level at the end of the year. In 2023, I think much of this stigma is going to fade away, and investors can get back to valuing Solana based on its underlying fundamentals.
Growth in the Solana ecosystem
Another key point to keep in mind is the overall Solana ecosystem. This includes NFTs minted on the Solana blockchain, the overall Solana developer community, and all of the projects and decentralized apps built on Solana. This Solana ecosystem is incredibly vibrant, and Solana took extensive efforts to reassure its developers throughout December that the network was not going away. There is also an extensive global tour known as Solana Hacker House planned for 2023. In 2022, this tour hit 24 cities worldwide and involved 12,000 developers.
While it can be difficult to gauge overall investor sentiment about Solana, the recent viral success of Bonk (BONK), the first-ever Solana meme coin, shows how the Solana developer community appears to be rallying around Solana this year. The meme coin has gone from being a small token of appreciation to members of the Solana community to being a story picked up by the mainstream media as proof of Solana's resurgence. The sudden buzz around Solana is what led to the crypto's early standout performance in January.
And, finally, don't forget about all the projects on tap at Solana for 2023. The big project to keep an eye on is the formal launch of Solana Mobile, which showcases the world's first-ever crypto phone. The initiative is an important part of Solana's entry into the world of Web3, which Solana thinks will be based around end-to-end mobile experiences. When integrated with Solana Pay (which launched in February 2022), Solana Mobile offers a very powerful value proposition. What other blockchain network can you think of that has its own native mobile device for blockchain experiences?
Buy Solana for the long term
While Solana certainly looks enticing as a quick, short-term play as a way to leverage all the new buzz around crypto at the start of a new year, I think Solana is even more attractive as a long-term play. If you check out some of the Solana price predictions for 2023, you'll start to see why. Some crypto analysts now think Solana could hit $25.44 by the end of the year, purely on technical factors. That would represent a near doubling of your investment, given Solana's current price of $13. When you take into account all of the new exciting initiatives happening within the Solana ecosystem, I think Solana can go even higher. As a result, I'm extremely bullish on Solana for the long-term future.
