Should You Forget Bitcoin and Buy Solana Instead?

The S&P 500 (SNPINDEX: ^GSPC) market index has seen a total return of 25% in 2024. That’s a fantastic year for the stock market, but it can’t hold a candle to the crypto market.

According to CoinMarketCap, the market value of every cryptocurrency added up to $1.65 trillion at the end of 2023. The combined market cap is up to $3.30 trillion on Dec. 19, which works out to a doubling in less than 12 months.

Crypto pioneer Bitcoin (CRYPTO: BTC) gained 138% over the same period. Smart contracts innovator Solana (CRYPTO: SOL) showed a 101% gain, just ahead of the crypto sector as a whole.

But the picture changes if you zoom out a little. Starting from the doldrums of December 2022, Solana stands head and shoulders above Bitcoin and the stock market with a 2,000% price gain:

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?

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.

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.

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