EATS bought Solona shares at a discount!!!
Solana Price data by YCharts
So Solana has a recent history of outperforming Bitcoin, even though the larger cryptocurrency enjoyed a pretty fantastic return in the same time span. It would be pretty awesome if that two-year trend could continue in 2025 and beyond.
Is this a good time to rebalance your crypto holdings, backing out of Bitcoin to buy more Solana instead?
Solana's surge: A rebound from FTX fallout
First, let me point out that Solana's recent price surge started from a very low point.
Caught up in the financial meltdown of Sam Bankman-Fried's FTX crypto exchange, Solana had recently plunged from $259 to $10 per token in about a year.
It's not easy to recover from a drop of that magnitude, but still a simpler task than skyrocketing from a higher starting point. Bitcoin also suffered from the FTX debacle, but its price drop was much smaller than Solana's. In other words, Solana's stellar gains from the summer of 2022 were assisted by an artificially low starting price.
Solana's real-world applications
On the upside, Solana is poised to perform. The cryptocurrency is still a top performer when it comes to executing smart contracts in a hurry, which is good for automating financial transactions and other asset-based changes.
In particular, Solana's high-speed contracts come in handy when you're managing a large volume of these decentralized programs at the same time in a time-pressure situation. Mobile games spring to mind, alongside blockchain-based trading platforms and non-fungible token (NFT) sales. Someday, maybe you'll even buy chewing gum and gas with a quick Solana transaction. That's the kind of stuff a cryptocurrency with smart contracts and rapid transaction settlement can do.
Therefore, Solana's return to the top-10 list of large and popular cryptocurrencies makes sense. Owning some Solana is probably a good idea in 2024, as the token seems likely to become widely used in real-world applications over the next couple of years.
Bitcoin's top growth catalysts
But can Solana outperform Bitcoin at this juncture? Perhaps, but I'm not so sure. Bitcoin has too many growth catalysts going on:
- Bitcoin recently updated its economic function for the fourth time, halving the amount of coins that are issued when a new block of Bitcoin transaction data is processed. These halvings have historically led to impressive price gains about a year later, and there's no reason to believe that this cycle will be any different.
- Exchange-traded funds (ETFs) based on up-to-the-minute Bitcoin prices are about a year old. Their introduction was expected to bring lots of new capital into the crypto market, using tools already familiar to any stock investor. About 5.2% of all Bitcoins have found their way into the spot Bitcoin ETFs so far, led by the massive iShares Bitcoin Trust (NASDAQ: IBIT). The capital inflow picked up the pace in November, though this week's disappointing economic reports led to the largest single-day outflow so far. Even Bitcoin and its ETFs are still quite volatile.
- November's Bitcoin enthusiasm referenced the election results. The incoming Trump administration brings a more crypto-friendly attitude to the Capitol and White House, and the president-elect included cryptocurrency support in his campaign. Among other things, this regime change could lead to the creation of a national Bitcoin reserve, which would boost the cryptocurrency's price by making it even more scarce on the open market.
I