The top two Ethereum (ETH 0.04%) challengers -- Solana (SOL -0.27%) and Avalanche (AVAX -5.66%) -- have made surprising comebacks thus far in 2023. After both lost more than 90% of their value during the 2022 crypto market meltdown, both have turned in remarkable performances this year. Solana is up almost 110%, while Avalanche is up about 62%.

So which blockchain network is the better buy right now? While Solana has outperformed Avalanche in 2023, there are a number of factors that make this comparison closer than you might think. As can be seen below, the two cryptos actually have very similar charts for the first quarter of the year.

Solana vs. Avalanche performance in Q1 2023.

Data by Trading View

Solana

Right now, Solana is losing momentum in the non-fungible token (NFT) market, which was the one place it looked like it could challenge Ethereum. As a result of concerns about Solana's well-publicized relationship with Sam Bankman-Fried and his failed cryptocurrency exchange FTX, several high-profile NFT collections have migrated away from Solana to other blockchains. 

While Solana initially put on a brave face about these departures, it's starting to show up in the numbers. For example, if you check out the latest NFT trading volume, it looks like trading in top Solana NFT collections has fallen off a cliff this quarter. Over the most recent 24-hour period, the top Solana NFT sold for just $814.59, and many of its top NFT collections recorded zero trades.

Meanwhile, Ethereum still has the top two NFT collections -- the Bored Ape Yacht Club and CryptoPunks -- and shows no signs of ceding its dominance in this area. By way of comparison, the top Ethereum NFT sale during that same period was a Bored Ape that sold for approximately $435,000.

Person tracking investments on phone and laptop at home.

Image source: Getty Images.

Another big concern at Solana is the still-present issue of network outages. This was a problem that plagued it throughout 2022, and was supposed to have been worked out at the end of last year, when it had time to refocus on the fundamentals.

But then, on Feb. 25, Solana experienced a 20-hour network outage. This is causing some developers and users to lose patience with it. 

The one factor, though, that could turn sentiment back in Solana's favor is the pending launch of its new $1,000 Saga crypto phone. This launch, now scheduled for April 13, is supposed to bring Web3, blockchain, and crypto to the masses. Solana initially released details about the Saga phone in June 2022, and it's now finally ready for public release after being available for orders this winter. 

Avalanche

Avalanche has also worked through its share of issues during the crypto winter, and is finally regaining some of its former momentum. While Solana seems to be going after the retail crypto market, Avalanche appears to have its sights set on the institutional crypto market.

Thus, while Solana is promising NFT collections and mobile phones, Avalanche is focusing on blockchain developments that corporate America and Wall Street care about.

Case in point: Big financial institutions including BlackRock and Citigroup have been talking up the enormous advantages of asset tokenization, which is the process of converting assets such as stocks and bonds into digital tokens that can be stored, accessed, and traded on a blockchain. And asset tokenization is something that Avalanche has made a priority. In 2022, it made headlines with the tokenization of a $4 billion private equity fund.

Moreover, in January, Avalanche lined up a big partnership with the cloud computing unit of Amazon in an effort to bring blockchain services to corporations, big institutions, and governments. This could be huge for Avalanche, since it would gain access to the big institutions using Amazon Web Services.

In short, all the same corporations and institutions that embraced cloud computing might now be tempted to experiment with blockchain offerings from Avalanche, such as its custom blockchain networks known as "subnets."

And the winner is...

While Solana has clearly outperformed Avalanche this year in terms of price, I'm particularly concerned about Solana's slowing growth in key areas such as NFTs.

In contrast, Avalanche seems to be growing behind the scenes in ways that perhaps are not yet making headlines. For example, as Citigroup recently pointed out, asset tokenization could be the next "killer use case" for crypto, and Avalanche is one blockchain that has embraced this paradigm shift in the financial world.

While I am bullish on both cryptos, right now Avalanche looks like the better long-term buy.