- Bitcoin breached its all-time high in March, but Solana is still 50% away from its own record high.
- High trading volumes, institutional adoption, a growing ecosystem, and network developments will all boost the network’s growth, analysts say.
Few cryptocurrencies have gripped investors’ attention as much as Solana.
Heavily endorsed as an alternative to Ethereum by Sam Bankman-Fried, then-CEO of FTX, Solana shot up 14,030% in 2021 before crashing back down 97% when FTX collapsed.
Left for dead by a majority of traders and investors, Solana staged a comeback story, rising almost 800% in the last 10 months to $128. Now, investors are wondering whether the network’s coin could ever fetch its all-time high price of $260 again.
“The Solana ecosystem is still what’s most interesting to me,” Quinn Thompson, founder of crypto hedge fund Lekker Capital, told DL News.
“Solana is this new, shinier, faster network with really good traction, Bitcoin is this long-standing major with its ETFs, and Ethereum is kind of trapped in the middle,” he said.
And the cryptocurrency could still have a long way to go, Joshua de Vos, research lead at crypto data firm CCData, told DL News.
“Despite Bitcoin already hitting its all-time high in price this year, Solana is currently still 50% from its [own],” de Vos said, attributing the discrepancy to the Bitcoin exchange-traded funds and the flows they brought to the top cryptocurrency.
However, de Vos said Solana would likely soon tackle its all-time high “if Bitcoin maintains a positive trajectory.”
Memecoin trading
The network has become particularly prized by memecoin traders in the last few months thanks to its low transaction fees.
“There’s been renewed enthusiasm around Solana since the end of 2023,” Adam Morgan McCarthy, an analyst at crypto analytics firm Kaiko Research, told DL News. “This was particularly evident when BONK, a memecoin on Solana, rallied 40% in December following its listing on Coinbase.”
The resulting trading frenzy even pushed Solana above Ethereum in terms of trading volume on decentralised exchanges in March, McCarthy said.
“People are naturally attracted to low transaction costs,” Thompson said. “If you reduce the transaction fees, you increase the volumes, because there will be a higher velocity of activity. That’s shown to be the case on Solana.”
Institutional adoption
Solana could also quickly become the darling of big firms and financial institutions.
Whereas Bitcoin has seen consistent outflows from institutional investment products in the last three weeks, Solana has kept on seeing regular inflows, according to a report Monday from CoinShares.
And fintech giant Stripe revealed last week that it will enable users to make payments in stablecoins by using either Solana or Ethereum.
“It was interesting that Stripe co-founder John Collison chose to demonstrate the firm’s upcoming crypto solution using Solana,” McCarthy said. “Solana’s growth will likely be impacted by use cases beyond memecoins and airdrop farming.”
Network development
De Vos, meanwhile, pointed to the development of the Solana ecosystem, with new decentralised applications and utilities being built on the blockchain.
The activity “has been growing significantly and is on track to maintain this,” de Vos said.
And while Solana still suffers from network congestion and failed transactions, upcoming upgrades will likely solve these issues and help scale the blockchain further, he said.
Same thing with network outages, as Solana has been criticised for its periodic downtimes in the past.
“Solana must maintain uptime of the network to instill confidence into users,” de Vos said.
Tom Carreras and Eric Johansson write about markets for DL News. Got a tip about Solana? Reach out at tcarreras@dlnews.com
