Solana (CRYPTO:SOL) happens to be one of the top cryptocurrencies I’m very bullish on right now. Well, to be honest, that’s been the case for a few years running.
Solana’s status as a top-tier layer-1 network supporting the rise of decentralized finance applications is well known. It’s how Solana’s infrastructure has been built, in my opinion, that drives most of the incredible adoption we’ve seen play out in recent years.
Users and developers have continued to flock to Solana, in part due to the fact that this network can handle thousands of transactions per second, at a fraction of the cost of competing networks. I’m of the view that these trends will continue to hold for the foreseeable future, though given the rate of innovation and technological development within the crypto sector, it’s also entirely possible that a competing network begins to take market share over time.
For those who think Solana’s current position in the overall world of layer-one networks is rock solid, here are a few other reasons to be bullish on this network right now.
Strong Fundamentals
Unlike stocks, which have key metrics such as cash flow and earnings investors can rely on to place a value on what those future cash flows (discounted to today) are worth, cryptocurrencies like Solana are often valued on a range of qualitative and quantitative metrics, some of which are harder to nail down than others.
On the quantitative side, I think some of the most important metrics for investors to focus on are total value locked, user growth, and developer growth over time.
In terms of total value locked, Solana’s TVL hti a record high in September of more than $12 billion. What’s interesting is that this overall surge, which coincides with more and more capital being locked within the Solana ecosystem via various decentralized applications, also coincided with a roughly 20% drop in the value of Solana over the past few months. In other words, while users were locking their capital into the Solana network either directly or via a Solana-powered DeFi application, its token price was dropping.
Typically, these dislocations between usage and token price tend to mean revert. I’m expecting this will be the case, considering other key usage metrics are pointing in the right direction. Looking at Solana-based decentralized exchanges, these have captured an impressive 14% of the overall market which has historically been dominated by Ethereum. I think those dynamics are likely to continue, particularly given Solana’s impressive surge to more than 45 million active addresses (2.2 million daily active wallets) recently.
Growth Drivers Remain In Place
Solana’s underlying technology and user growth are world-class. But in order for Solana’s token to continue to rise in value, many investors need to see more in the way of innovation on the horizon.
Don’t worry – Solana’s developer team has you covered.
A range of upgrades and proposals are being considered to further improve on Solana’s already-impressive market share lead in current sub-segments of the DeFi market. The goal is to promote Solana as the number one ecosystem for those looking to build on-chain.
A number of experts following Solana are now targeting the $220 price level, assuming spot ETF inflows begin to pile back in (after a recent spat of outflows changed the calculus somewhat, and are a key driver behind this token’s recent decline).
I’m going to continue to monitor usage and developer growth within the Solana ecosystem moving forward, and will want to ensure that these metrics are pointing in the right direction. But for now, from what I can see, most growth drivers are still in place. Thus, Solana is still a buy in my books at around $140 per token.
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