How High Can Solana Go?

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Contributor, Benzinga
March 28, 2022

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Solana is a Layer 1 Blockchain project that was designed for speed and throughput, all while maintaining decentralization and allowing for cheap transactions. These attributes makes Solana great for high throughput functions on the blockchain, such as music streaming, gaming and high frequency trading. Many decentralized applications have already been built on Solana, including decentralized exchanges (DEXs) and lending platforms.

Solana's price skyrocketed from just a few dollars at the start of 2021, with many early investors experiencing tremendous gains. However, 2022 have been rather disappointing. Considering Solana is down significantly from its all time high, is there still room for future gains? Let's take a look at how high Solana (SOL) can go.

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What is Solana?

Dubbed the "Ethereum Killer", Solana competes with other smart contract blockchains like Ethereum, Binance Smart Chain and Avalanche. Essentially, smart contracts are code that's uploaded to a blockchain to create decentralized applications (DApps) investors can use for a variety of purposes. Right now the largest categories of DApps being built on these networks involve token exchanges and lending platforms, but developments are quickly being made in gaming, the metaverse and insurance protocols.

Solana is a blockchain project that uses a novel concept called “proof-of history.” Proof-of-history encodes timestamps into the blockchain, allowing for faster transaction times, high throughput, and low transaction costs. The project is headed by Anatoly Yakovenko and Raj Gokal, who are piloting the project through this period of rapid growth.

Solana Market Capitalization

As of October 2022, Solana is ranked the 9th largest cryptocurrency with a market capitalization north of $10 billion. The token is down significantly from its all-time highs and is currently trading around $30 at the time of writing. In terms of growth potential, market cap is the more important metric to pay attention to. Coins with larger market caps than Solana are Cardana, Binance, and XRP in that order.

While Solana has a large market capitalization compared to most other cryptocurrencies, it's just 6% of Ethereum's market capitalization. This may suggest that Solana has room to grow, but Ethereum has much more adoption and use cases than Solana. For Solana to reach the market cap of Ethereum, it will need to grow its user base, on-chain applications, and the amount of liquidity on its network –– these are not easy tasks.

Bull Case For Solana

Solana still has a lot of growth potential assuming the overall bull market structure stays intact. Solana currently hosts a variety of Defi applications, NFT projects, and Web3 Applications, whereas some competitors like ADA has yet to implement smart contracts. If digital asset prices continue to appreciate, it wouldn’t be unreasonable to see Solana continue to grow. At current valuations, SOL would need to trade around $300 per token for its market cap to reach $100 billion.

Bear Case For Solana

Many projects have tried to steal a significant portion of market share from Ethereum over the years, and very few have seen long periods of success. Tackling an established giant like ETH requires exceptional product-market fit and cult-like support from the surrounding community. Although Solana has consistently outperformed throughout 2021, the opposite has been true so far in 2022 . Profit-Taking in times of market uncertainty has weighed heavily on the token price. As of October 2022, Solana is down almost 90% from its all time high. Lastly, all cryptocurrencies are heavily impacted by the surrounding market structure.

Where to Buy Solana

Solana is widely available to investors inside and outside of the United States. The exchanges that it can be purchased on include FTX US, Binance US, Coinbase Pro, Kucoin, Bybit, and many more.

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Where To Store Solana Safely

Storing your cryptocurrency safely is extremely important due to the inherent nature of irreversible transactions. Although it may be convenient to store your money on an exchange when actively trading, it isn’t the safest route for protecting your capital. Wallets, both software and hardware can protect your cryptocurrency from the risk of exchange hacks or a compromised account. They do this by giving you physical, personal custody of your tokens by allowing you exclusive access to your private keys. A great saying in crypto regarding self-custody says “Not your keys, not your coins!”

Best Hardware Wallet: Ledger

Ledger has an extensive track record of providing hardware wallets for cryptocurrency investors. With a simple to use interface that unlocks with a pin code, many investors choose this staple device. Additionally, Ledger offers desktop and mobile programs that allow you to track the value of your assets without sacrificing security.

Best Software Wallet: Exodus

Exodus wallet is a software wallet, meaning that your coins are stored offline using your computer or mobile device. Although they aren’t as safe as hardware wallets, they are a great option for those that are looking for more safety than leaving coins on exchanges. Exodus wallet supports Solana, and even offers staking for passive income on your assets.

Bonus Section: Solana’s ecosystem is growing rapidly, and the low cost of transacting on the network allows for new and innovative protocols to be built atop the blockchain. If you are interested in how the network’s projects can affect the growth of the token price, be sure to check out all of the projects within the solana ecosystem here. The more users, TVL, and applications on a blockchain, the more investors may be eager to invest in the underlying project.

Current Crypto Prices

At the moment, the crypto market has traded sideways from its local bottom set in June 2022, with many coins either approaching or below significant support levels. While this is important for them to have recovered, the current recovery is relatively weak, and further downside from here is possible. Many investors believe that the crypto market still needs to retest lower support levels before the crypto market will reach new all time highs. If that turns out to be the case, that means there’s a good chance of few more months of boring sideways action for most crypto assets. 

So, Is Solana a Good Investment?

When choosing crypto investments, there are an abundance of things to consider, and volatility is the only thing that is certain. Buying assets that are still proving their value can be a great opportunity to make gains before other investors have caught on to the value of a project. One of Solana’s head advisors is Sam Bankman-Fried, a 29 year old multi-billionare that is also the CEO of FTX  exchange and Alameda Research, a quantitative trading firm. With strong partnerships and the potential to become more integrated with powerful exchanges like FTX, it’s very possible that Solana continues to grow into the future. Overall, the modern iteration of the crypto ecosystem is still very young, and the use cases that Solana can serve are much larger than what it is currently being used for. If the vision of “blockchain at NASDAQ speeds” catches on among large financial institutions, Solana’s upside could be many multiples from current prices. Placing concentrated bets on teams with strong visions is a strategy that can pay dividends in crypto, and this team shows no signs of slowing down. 

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