Up to 90% in 2023, should you buy this unstoppable crypto?

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Praised for its exciting features and disruptive potential, Solana (SOL -3.01%) burst onto the scene in March 2020, just at the start of the coronavirus pandemic, and quickly skyrocketed nearly 26,000%. in value to reach its all-time high in November 2021 Then, with the general negative sentiment surrounding the industry, the price of SOL fell 96% between its peak and the end of 2022. This roller coaster ride is indicative of how the speculative digital assets.

Things have started to quickly turn positive recently. As of this writing, Solana has more than doubled in 2023. Should investors take advantage of the momentum and buy this seemingly unstoppable crypto now?

A difficult year for the sector

After roughly tripling in value in 2021, the entire crypto market has plummeted in 2022. It started the year at a market value of $2.2 trillion, falling below $800 billion. dollars at the end of December. We all know that the cryptocurrency market is extremely volatile, but that has been hard for many investors to bear.

The tightening of monetary policy by the world’s major central banks has led to a feeling of risk among investors, and cryptocurrencies have been the hardest hit. But this factor deserves only part of the blame.

Worse still, the series of high-profile blowouts that occurred in 2022. Chief among them was the FTX debacle, where the now bankrupt crypto exchange used customer funds to enter into speculative trades through its sister company, Alameda Research. These unfortunate events have brought to light just how risky, complex and opaque the industry is.

It also became known that Alameda Research held around 20% of SOL’s outstanding token supply. Concerns about a forced liquidation put downward pressure on SOL’s price late last year.

Solana’s potential

Despite the gray clouds hanging over the crypto market, SOL has some cool features that help it stand out among over 22,000 different projects. Solana is known for its incredible speed, with a theoretical throughput of 50,000 transactions per second (TPS). It’s right up there with Visanetwork’s capacity of 65,000 TPS – and compared to Ethereum’s 13.

Solana’s consensus mechanism (the way the system verifies transactions and secures the blockchain) is a combination of proof of stake and proof of history. The latter is an inventive feature that eliminates the need to carry timestamp data, leading to faster throughput.

This makes Solana interesting for certain uses, in particular payments. Solana Pay is a service that allows merchants to directly accept payments from customers with virtually no fees and instant settlement, with transactions occurring on the blockchain. For small businesses with already thin margins, this could be a boon to profitability as they could avoid paying high fees to traditional payment providers.

And the Solana Mobile smartphone is expected to ship early this year. It will be the world’s first web3 smartphone, connecting to the Solana ecosystem and allowing users to engage in different decentralized applications. It’s too early to tell how widely this product will be adopted, but it’s a positive development intended to attract more users to the crypto economy in general, and Solana more specifically. The goal is to increase demand for SOL, which could drive up its price.

Solana’s market capitalization is $8.6 billion, making it the 11th most valuable cryptocurrency in the world. Even with the huge jump in price so far in 2023, if this innovative blockchain network can deliver on its promise, it will likely be worth much more in the future. For investors willing to take the risk, it may make sense to allocate a tiny portion of a portfolio to SOL with a time horizon of at least five years.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool holds posts and recommends Ethereum, Solana, and Visa. The Motley Fool has a disclosure policy.

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