Just a few years ago, XRP (XRP +2.44%) was a crypto market darling. Investors thought it was going to skyrocket in value, and it became one of the top cryptocurrencies by overall market cap. Today, however, XRP is trading for under $1 and is still mired in an ongoing lawsuit with the Securities and Exchange Commission (SEC).
So maybe it's time to forget about XRP and find a new cryptocurrency capable of soaring in value. That cryptocurrency could be Solana (SOL +0.22%). After an epic rally at year-end, it passed XRP's market cap in December and is now poised for an incredible run.
Is Solana the next Ethereum?
The case for investing in Solana can be distilled down to a single thesis: Solana is the next Ethereum (ETH +3.22%). When Solana publicly launched as a smart contract blockchain platform in March 2020, it was immediately touted as a potential "Ethereum killer" due to its super-fast speeds and super-low transaction costs. That made Solana valuable for a wide range of uses, from blockchain gaming to decentralized finance (DeFi). In fact, at one time, people referred to Solana as a "decentralized Nasdaq."
Now, four years later, Solana is starting to fulfill some of its early promise. While Solana is still a long way from surpassing Ethereum, it is making inroads quickly. And institutional investors are starting to take notice. In November, Cathie Wood of Ark Invest appeared on CNBC, making the case for Solana as a faster, more cost-efficient version of Ethereum. If Solana keeps up its momentum, it could eventually topple Ethereum as the premier smart contract blockchain platform, and that would provide a huge boost to its overall valuation.
How high can Solana go?
The big question, of course, is how high Solana might eventually go. Back in October, investment firm VanEck modeled a number of scenarios for Solana's future growth. In a base-case scenario, VanEck saw Solana reaching a target price of $335 by the year 2030. At the time, Solana was trading around $30, so that price implied a 10x gain. But the bull-case scenario called for Solana to reach a target price of $3,211. At the time, that price implied a more than 10,000% gain.
CRYPTO: SOL
Key Data Points
So exactly how realistic is this super-bullish price forecast? According to VanEck, it will require Solana to continue to chip away at Ethereum's dominant market share in several key categories, including both decentralized finance and blockchain gaming.
Oh, and it also was premised on the idea that Solana would eventually find a "killer app" capable of onboarding 100 million users. To put that number into perspective, ChatGPT onboarded 100 million users in two months. The AI system doesn't rely on blockchain networks, but it's a useful reference in terms of sheer scale of Solana's most bullish price projections.
The 100 million user problem
So where is Solana going to find that mythical "killer app" capable of onboarding 100 million users? My assumption is that it may come from Solana's new mobile crypto strategy, which includes physical hardware products (i.e., a new phone called the Saga) as well as software tools (i.e., the Solana Mobile Stack) that mobile developers can use to create blockchain apps.
The big picture basically comes down to this: Entice developers to create new apps, put those apps in an app store, and then get consumers to download those apps to their phones. At some point, one of those apps is going to hit it big, right?
Image source: Getty Images.
Admittedly, solving the 100 million user problem will not be easy. "Killer apps" like ChatGPT come along rarely. As a result, I'd be careful about using the top-end $3,211 price target for Solana. But even if you use the more conservative base price target of $335, that would still imply a more than 3x return from Solana's current price of $100 per token.
Solana's trajectory in 2024
While I'm long-term bullish on Solana, it is concerning that Solana has had so much difficulty gaining traction this year. After a remarkable 2023 when it soared by nearly 900%, Solana is down approximately 5% to start this year. To some extent, I'm chalking it up to the Bitcoin exchange-traded fund (ETF) hype. In all the enthusiasm around Bitcoin, investors seem to have lost interest in every other cryptocurrency.
But I'm expecting things to turn around soon for Solana. Unlike XRP, it doesn't have an SEC case hanging over its head. And, unlike XRP, it is gaining traction with institutional investors as a potential Ethereum challenger. If you're looking for a crypto poised for an incredible run, you should consider Solana.
