By almost any metric, Solana (SOL -0.18%) has been one of many worst performers within the crypto market this 12 months. Solana is down 57% over the previous 30 days and 92% for the 12 months. That makes Solana the worst-performing high 100 crypto over the previous month, and the 97th worst-performing crypto year-to-date. In brief, that is all-time low for Solana.
However there’s an ultra-contrarian case for investing in Solana proper now. Fears of FTX (FTT -5.30%) contagion could also be wildly overblown, and the basics of Solana blockchain exercise proceed to indicate indicators of enchancment. This is a more in-depth take a look at why it’d make sense to spend money on Solana proper now.
FTX contagion
It is inconceivable to speak about Solana as of late with out additionally speaking in regards to the failed crypto trade FTX and its affiliated hedge fund, Alameda Analysis. Sam Bankman-Fried, the previous chief government officer of FTX, was an early investor in Solana; as well as, Alameda continues to be one of many largest holders of Solana. By some estimates, Alameda now holds 8.75% of the full circulating provide of Solana. The worry is that chapter proceedings at FTX will set off a fast liquidation of this Alameda stake, putting large downward strain on the value of Solana.
This is a crucial level to remember, however a lot of the FTX contagion narrative appears to be overblown. Any crypto with ties to Sam Bankman-Fried has been tarred and feathered as a “Sam coin” and been punished mercilessly by the market. Buyers aren’t actually positive how the unfolding FTX-Alameda saga goes to play out, so it is higher to be protected than sorry. Higher to promote Solana now, reasonably than look forward to a mass liquidation occasion later. That stated, Solana co-founder, Anatoly Yakovenko, has stated that Solana nonetheless has 30 months of runway left attributable to all of the VC funding it raised up to now. He additionally confirmed that Solana had no property on FTX, and therefore no direct publicity.Â
Underlying blockchain fundamentals
Furthermore, Solana continues to indicate indicators of enchancment in its underlying blockchain fundamentals, as measured by person development, community stability, and transaction exercise. Crypto analysis agency Messari just lately launched its “State of Solana” report for Q3 2022, and the numbers look higher than one may need anticipated. Though this report doesn’t take into consideration latest occasions at FTX, it does present the general pattern at Solana. For instance, common every day transaction quantity has seen a 30% bump on a quarter-over-quarter foundation.
Picture supply: Getty Pictures.
And, as Messari highlights, Solana is continuous to make inroads in non-fungible tokens (NFT). Solana is now the No. 2 participant within the NFT market, trailing solely Ethereum (ETH -3.21%). Solana has seen fast development within the variety of new NFTs out there on the market, and has been taking steps to lure NFT creators over to the Solana platform. For instance, the highest Solana NFT market, Magic Eden, has been taking a really aggressive strategy to guard creator royalties and present creators that they’re wanted and wished on the Solana platform. In November, Solana noticed a 42% spike in NFT buying and selling exercise.
New future initiatives
The actually thrilling story for Solana, although, entails future strategic initiatives. Solana, for instance, goes to launch a brand new cellular crypto technique in early 2023 that may see the introduction of Saga, the first-ever crypto cellphone. Solana can be taking additional steps to develop distinctive types of blockchain gaming on its platform. One instance that noticed an enormous spike in recognition in 2022 was STEPN (GMT 0.85%), which permits customers to earn crypto by shopping for NFT sneakers after which happening every day walks or runs.
Ought to I purchase Solana?
Clearly, investing in Solana proper now’s going to require an incredible quantity of braveness. However alternatively, Solana could have nowhere to go however up. It’s down 92% this 12 months and 95% from an all-time-high of $260. At one time, Solana was an “Ethereum-killer” and one of many hottest cryptos available in the market. Now it is actually one of many worst cryptos you should purchase, as measured by latest efficiency.
However I believe buyers are shedding deal with the underlying fundamentals at Solana and the expansion potential of recent initiatives already underway. Solana is diversifying away from NFTs (arguably one of many worst market segments in crypto proper now) and into areas like cellular and gaming. I am bullish on Solana as a long-term funding, and I believe the latest FTX scandal may even find yourself being a web optimistic for Solana: It should power Solana to construct even smarter with out the simple VC cash it had entry to up to now.
