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Should You Buy Solana While It's Under $250?
Key Points
Solana (CRYPTO: SOL) was a standout cryptocurrency in 2021, gaining over 11,000% throughout the year. As a high-speed smart-contract blockchain, it broke into the top 20 cryptos by market cap in April 2021 and has maintained its shine. Earlier this year, Solana hit a peak of nearly $295 and traded between $190 and $250 in September.
In projection, Standard Chartered analysts estimated Solana could reach $275 by the end of the year and soar to $500 by 2029. Solana has the potential to surpass these targets if it can continue to capture portions of the stablecoin and tokenized asset markets, though it requires not only speed but also stability.
Follow the Money
Solana's historical charts show a close relation between its price and total value locked (TVL) — the amount of money locked in smart contracts on its ecosystem. The price peak in January aligned with a record-high TVL.
Currently, Solana boasts a $12.5 billion TVL, according to DefiLlama, positioning it as the second-largest chain with approximately 9% of all on-chain funds. This is significantly less than Ethereum’s $94 billion TVL. However, Solana doesn't need to surpass Ethereum to be successful. Solana is carving out its identity and expanding its ecosystem’s projects and value. Starting in 2024 with a TVL of $1.4 billion, Solana now aims to sustain its TVL growth with more usage in decentralized finance (DeFi), stablecoins, and tokenized assets.
Why Buy Solana at Under $250?
Solana's TVL and price have historically surged with specific crypto trends, like January's Pump.fun memecoin craze. Back in 2021-22, non-fungible tokens (NFTs) injected significant value into the ecosystem as the digital collectibles market boomed.
Currently, the focus is on stablecoins and other tokenized real-world assets (RWA). Solana is starting to make inroads into the RWA market, potentially sparking further TVL growth.
Blockchain tokens can represent ownership of tangible assets. Tokenizing real estate ownership allows fractional property ownership, and tokenized stocks can be traded as tokens representing stock value. The issuer retains the actual stock in reserve accounts. The longevity and impact of tokenized assets on Solana can be substantial. Standard Chartered forecasts tokenized assets could surpass $30 trillion by 2034. Presently, there's an estimated $33 billion of tokenized assets on-chain, per RWA.xyz.
RWA.xyz indicates growth in Solana’s tokenized assets, increasing nearly 40% in September to reach approximately $683 million (excluding stablecoins). This accounts for nearly 4% of the total market share. Solana’s tokenization includes treasury funds, institutional funds, equities, private credit, and more.
Potential Solana growth obstacles include regulation, as a clear legal framework will be critical for tokenized assets' evolution, and technical challenges, such as the three outages experienced in 2022. Nonetheless, upgrades like Firedancer have kept the network operational since February 2024. Any further technical issues could weaken its competitive edge.
Tokenization Could Push Solana to New Highs
The growth of tokenized assets might be the transformative event the cryptocurrency sector awaits. It harmonizes blockchain benefits like transparency, accessibility, and security with practical real-world applications. Despite the potential, it’s early days, and the market’s development remains uncertain. Cryptocurrencies inherently carry high risks and should compose only a small portion of investment portfolios.
Solana’s speed, low transaction costs, scalability, and innovation place it well to capture a substantial share of the burgeoning tokenization market. Historically, its price has risen in tandem with value locked on the platform, though past performance doesn’t predict future outcomes. Solana’s potential for increased value underscores its promising near- and long-term prospects.
This article has been published in fool.com via Yahoo News.
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