Cryptocurrencies are back in vogue. The entire industry’s market cap sits just under $3.5 trillion (as of Jan. 28), with investors adopting a risk-on approach.
Solana (SOL +0.77%) has benefited tremendously from this trend. Its price has skyrocketed 640% in the past 15 months. And it’s up 23% already this year.
As the innovative digital asset trades below $250, is Solana a once-in-a-decade buying opportunity right now?
Compelling properties
Solana currently carries a market cap of $112 billion. This makes it the fifth most valuable blockchain network on the face of the planet. It's clear the market sees something intriguing about Solana to make it worth so much.
Solana possesses unique properties that help it stand out in the crowded crypto field. It operates a proof-of-stake consensus mechanism to approve transactions. However, Solana also utilizes something called proof-of-history, which keeps track of time in a more data-efficient manner.
The result is that Solana’s network is incredibly fast. It can theoretically process 50,000 transactions per second (TPS) at very low fees. For comparison’s sake, Bitcoin and Ethereum, the two most valuable cryptocurrencies, can handle roughly 4 TPS and 14 TPS, respectively.
CRYPTO: SOL
Key Data Points
Greater usage
Solana's speed and low fees make it useful in the world of payments. Solana Pay debuted roughly three years ago to simplify merchant-consumer transactions, aiming to boost innovation and lower costs. The service is integrated with Shopify, showcasing its appeal to a major e-commerce platform and its customers.
Solana is also working on a mobile strategy. So far, it has released one smartphone, the Saga. Another device, known as the Seeker, is expected to launch this year. Despite soft demand, the entire purpose of this effort is to give users an easier way to onboard into the crypto economy, which might result in greater demand for Solana.
The network is seeing more usage. Total value locked (TVL), a measure of the amount of money that’s locked into a particular blockchain, is $11.1 billion on Solana. That figure still pales in comparison to Ethereum’s $63.2 billion, but Solana’s growth since the start of 2024 has been astronomically higher.
Solana is becoming a hotbed for meme coins. President Donald Trump and first lady Melania Trump each launched their own meme tokens on the Solana blockchain to immediate success. Despite meme coins providing no value, this certainly gives Solana a vote of confidence that could support more activity in the future.
There are also rumors swirling about the Securities and Exchange Commission approving Solana exchange-traded funds (ETFs). A positive development could see huge amounts of capital flowing to Solana.
Uncertainty creates risk
There has been a lot working in Solana’s favor. This is evident in its price moving markedly higher since late 2023. And the Trump administration’s positive stance toward the cryptocurrency industry could be all the convincing that investors need, as it could usher in a new era of capital, innovation, and adoption in the space. Time will tell.
But given such a big jump over a relatively short period, I don’t think Solana is a once-in-a-decade opportunity today. The crypto market is characterized by times of boom and bust. It's easy to believe we are closer to the former situation.
Add this to a still very uncertain future for crypto overall. I don’t believe anyone has any confidence in what the industry in general, and Solana in particular, will look like five years from now. In my opinion, meme coins aren’t the future. That uncertainty introduces a lot of risk.
I’m not a buyer of Solana, but owning it could make sense for investors comfortable taking on extra risk in their diversified portfolios.
