Solana has been one of the best performing cryptocurrencies since its launch in 2020, and its price has just declined from recent highs.
Most of the crypto market has been in the red lately, and Solana (GROUND +0.01%) is no exception. In September, it approached $250, its best price since reaching an all-time high of $294 at the start of the year. It’s now worth around $180 (as of October 22).
Dips can be a good opportunity to buy a quality investment at a discount. With cryptocurrency, it’s a little trickier, given the risk involved. If you’re wondering whether you should buy Solana when it’s under $200, here’s what it looks like as a crypto investment right now.
Image source: Getty Images.
The fundamentals have not changed
Although the price of Solana has changed, its fundamental value remains unchanged. What makes Solana special is its speed and ultra-low costs. It uses a combination of a proof-of-stake consensus mechanism and its own unique proof-of-history system to validate transactions, providing efficiency that few blockchains can match.
Solana regularly processes around 1,000 transactions per second (tps), according to Chainspect data, and has a theoretical maximum of 65,000 tps. It is the second fastest blockchain in terms of tps, behind only Computer Internet and far ahead of competitors like Ethereumwhich processes around 20 tps. Transaction fees on Solana are typically well below $0.01.
Crypto’s recent flash crash provided a stress test for Solana, as users rushed to sell their positions. While other blockchains were crashing, Solana showed that it could maintain high performance during periods of high activity. It continued to process thousands of transactions per second without increasing fees.
Solana is still far behind Ethereum for DeFi
As a smart contract blockchain, Solana provides a platform for decentralized finance (DeFi) services, much like Ethereum. It was even one of many blockchains dubbed the “Ethereum killer.” But more than five years after its launch, Solana is far from catching up with its biggest rival in this area.
There is $11 billion in total value locked (TVL) in DeFi applications on Solana, according to DeFiLlama. This number is trending in the right direction – it was around $6 billion a year ago – but Ethereum has $83 billion in TVL, or 63% of the entire DeFi market.
The same is true if you look at the growing stablecoin market. Once again, Ethereum is the undisputed leader, with a stable value of $165 million. Solana has $15 billion.
This is not to say that Ethereum is the best investment. Solana, as mentioned, is a much more efficient blockchain with faster transactions and lower fees. However, Ethereum has a huge first-mover advantage. Solana’s growth will likely depend on its ability to capture a larger share of the DeFi market.
Today’s change
(0.01%) $0.01
Current price
$200.17
Key Data Points
Market capitalization
110 billion dollars
Daily scope
$197.74 -$203.68
52 week range
$96.70 -$293.31
Volume
6.1B
Average flight
0
Gross margin
0.00%
Dividend yield
N / A
ETF approval expected to attract institutional investors
Several fund managers have filed applications for the first Solana spot ETFs, and the Securities and Exchange Commission (SEC) has already given tentative approval to one from 21Shares. A final review is still required, which can only occur once the government shutdown ends and the SEC reopens. Still, it appears Solana ETFs could receive approval before the end of the year.
ETFs provide an alternative way to invest in cryptocurrencies and, importantly, an option available to institutional investors who cannot purchase coins directly. Bitcoin and Ethereum, the first two cryptocurrencies to receive one-time ETF approval, have both seen significant investment in their ETFs. Bitcoin ETFs received inflows of $62 billion and Ethereum ETFs received $14 billion.
A risky purchase with significant growth potential
There are several things to like about Solana as a cryptocurrency investment. Its method of validating transactions gives it a significant performance advantage over most other blockchains. This helps attract more users and developers. In fact, Solana was the best blockchain ecosystem for new developers in 2024.
If Solana ETFs get SEC approval, it means more money will flow into this cryptocurrency. Even though Ethereum has much more DeFi TVL, Solana has made progress in this area.
Although Bitcoin and Ethereum seem likely to continue to dominate the crypto market, I think Solana still has plenty of room to grow. The current price represents a solid buying opportunity, knowing that it is a volatile asset and could continue to decline in the near future. Cryptocurrency, including Solana, is also high risk. I wouldn’t commit too much, but this might be a good time to grab some SOL tokens.
