Solana (SOL +7.08%) is down 30% so far this year, and many investors expect it to fall even further, and soon. But, as wise investors know, there's a smart set of reasons to sell an investment and a much larger set of ill-advised selling reasons that may lead your portfolio's value downward over time.
In that spirit, let's examine three bad reasons to dump Solana right now and one important reason to actually buy it with $1,000 instead.
CRYPTO: SOL
Key Data Points
1. The price is down a lot this week
Late February has been a bad time to be a Solana holder. Its price is down by 44% in the last 30 days. And that is absolutely not a good reason to sell the coin.
In short, the investment thesis for Solana is not something that is changed by the price fluctuating from week to week. None of the chain's technical accomplishments are diminished. It still has a thriving ecosystem of decentralized finance (DeFi) coins, meme coins, artificial intelligence (AI) projects, non-fungible token (NFT) marketplaces, and more. There are still many thousands of developers working on producing more projects on the chain, and its smart contract infrastructure is still in operation.
Furthermore, there will likely be more of all of those projects five years from now than there are today, driving demand for Solana. So don't sell based on short-term volatility.
2. Meme coins are down even more
Many people know Solana as the chain where the meme coin casino lives. That's true enough. But when meme coin valuations plummet as investors flock to more grounded investments rather than frivolities, it's enough to encourage many of the flightier types to want to sell. And most of the top memes hosted on the chain are down by 70% or more, with nearly all of the smaller memes simply going extinct.
Go back to the prior section of this article and look at all the different types of projects that people are developing. There's a lot more going on with Solana's chain than meme coins alone. And remember: If someone sells a meme coin and causes its price to drop, there is a good chance that they are actually swapping it for Solana. That same Solana can then be invested in utility coins or more serious projects on the chain.
So a meme coin crash doesn't have to negatively affect the chain's main coin whatsoever, and it might actually lead to on-chain capital being allocated more efficiently. In other words, your meme coins being down is not a good reason to sell Solana.
3. Big supply unlocks are here
As of March 1, a lot of previously locked coin supply will be disbursed to certain Solana holders. The unlocks are worth around $2 billion, or about 2.4% of the total circulating supply, and the coins are being unlocked as part of the bankruptcy proceedings of the now-defunct FTX exchange. Many investors who lost their money during the FTX collapse will thus be getting some or all of it back.
Cryptocurrency investors fear these unlocks because they expect that everyone getting the coins will immediately sell them, hoping to recoup cash that they once assumed was completely lost to fraud. That isn't a reasonable assumption. It's as if someone believed holding onto Solana was going to bring them a good return on their capital. So they wouldn't sell it as soon as they came into possession of more. It isn't as though the entire new supply will be sold off immediately.
Even if it was, it's important to note that it wouldn't detract from the investment thesis for buying the coin. Sure, massive sales would put a big dent in the coin's price, but it would be temporary, so long as investors at large maintained faith that it'd be worth more in the future than it is today. So don't be too afraid of the increase in supply.
1 reason to buy: AI agent and infrastructure projects are looking good
It's a good idea to buy this dip on Solana. Its budding AI agent and AI agent infrastructure segment is just one reason why that's the case.
There are already a handful of automated AI agents that control their resources via wallets on Solana and are capable of making memes, music, and posts on social media. Per the vision of the evangelists, such AI agents will eventually need to transact with each other at mass scale using their resources stored on Solana. The chain itself will accrue usage fees when they do that, and there will also be a lot of new capital attracted as a result of the as-yet undefined services that the AI agents offer to them. Similarly, infrastructure projects that enable the creation of these agents, or help them to interact with the blockchain or the real world, are also slated to be a growth segment on the chain.
Will this vision actually come to pass? It's unclear, though it's very likely that the possibility will drive a lot of demand for Solana at least until investors have enough experience with the segment to decide it isn't worthwhile. And that means if you're an enterprising investor, it's worth buying the coin to capture some of the upside from that growing interest area.
