Solana
3 reasons to buy Solana when it costs less than $200
The fifth largest cryptocurrency in the world still has a bright future ahead of it.
Solana (GROUND -1.22%) has taken investors on a wild ride since its first block was created on March 16, 2020. The cryptocurrency launched at $0.95 and soared to an all-time high of 260, 06 on November 6, 2021, but is now trading at around $165.
Initially, Solana’s blockchain attracted a lot of attention from developers as a faster alternative to Ethereum (ETH -0.77%). But Solana then suffered a series of network congestion and security failures, and bankrupt cryptocurrency exchange FTX – one of its largest investors – hastily liquidated its holdings in order to raise more liquidity to repay its creditors. As it suffered these setbacks, rising interest rates largely crushed the cryptocurrency market.
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However, Solana’s price has increased by more than 60% this year as the macroeconomic environment has stabilized and investors have warmed up to cryptocurrencies again. Therefore, it might be a good idea to buy Solana while it’s still less than $200 for three simple reasons.
1. Potential ETF approvals are in sight
The U.S. Securities and Exchange Commission (SEC) recently cleared the way for the first spot-priced Ether ETFs to file for public listing. These ETFs I will not start trading until their S-1 filings are approved, but the decision could pave the way for Solana ETFs to be approved, as Solana uses the same proof of stake (Point of sale) mining method like Ethereum.
The SEC has previously argued that only Bitcoin (BTC -0.01%) could be classified as a commodity and allowed for spot price ETFs because its proof of work (PoW) the method more closely resembled the act of physically extracting precious metals. The agency argued that while the PoS method was more energy efficient, it was also more similar to securities trading.
But by greenlighting the market’s first spot-priced Ether ETFs, the SEC essentially admitted that Ether is a commodity and that PoS can be tied to spot prices. This sets a strong precedent for future agency approvals for ETFs holding other PoS tokens like Solana. We probably won’t see serious talk about Solana ETFs until the first Ether ETFs actually arrive, but this anticipation and buzz could push its price much higher this year.
2. The expansion of its ecosystem
Solana uses the same PoS mining method as Ethereum, but it speeds up the process with its own Proof of History (PoH) method. This key difference allows Solana to process transactions at a much faster rate than Ethereum, and it is receiving a lot of attention as an alternative way to develop decentralized applications, tokens, and payment services.
Solana has already been used to develop decentralized exchanges like Jupiter and Orca, and it remains a popular platform for launching coins like BONK And Wireless. Larger e-commerce and fintech companies have also partnered their services with Solana. Shopify (NYSE: SHOP) integrated its Solana Pay payment protocol into its own e-commerce services last year, Visa (NYSE: V) now runs its stablecoin settlement program on the Solana blockchain, and PayPal (NASDAQ: PYPL) recently attached its own USD stablecoin to Solana to facilitate “faster and cheaper” transactions.
The continued expansion of this ecosystem should limit Solana’s downside potential and make it one of the best tokens to buy as the cryptocurrency market heats up again.
3. Stabilization of interest rates
Rising interest rates have kept investors away from cryptocurrencies and other speculative investments throughout 2022 and most of 2023. However, this crypto winter is gradually ending as interest rates stabilize . Once the Federal Reserve starts cutting interest rates again, speculative investors will likely return to major cryptocurrencies.
Rising interest rates have already wiped out many smaller altcoins, but Solana remains the second-largest PoS token in the world, with a market cap of nearly $77 billion. It is also the fifth largest cryptocurrency overall, and will likely continue to grow as more investors recognize its importance. fundamental strengths.
But investors should prepare for high volatility
Solana has a bright future, but it will likely remain volatile in the years to come. Investors who can stomach the volatility should accumulate Solana while it’s still trading under $200, but it could easily be halved before doubling or tripling.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Bitcoin, Ethereum, PayPal, Shopify, Solana and Visa. The Motley Fool recommends the following options: Short June 2024 calls at $67.50 on PayPal. The Motley Fool has a disclosure policy.