Solana: Top Pick for February or Token to Avoid?

Here’s Why Solana (CRYPTO:SOL) could potentially be a great cryptocurrency to consider in February, rally or not.

| More on:
crypto, chart, stocks

Image source: Getty Images

The performance of Solana (CRYPTO:SOL) wowed investors in 2021. This exciting crypto rose 11,000% last year, highlighting to investors Solana’s potential to be a future cryptocurrency leader. With a market value of over $35 billion, Solana is the seventh-biggest cryptocurrency on the planet. However, this crypto has not been on a great trajectory of late, down well more than 50% from its peak just a few months ago.

That said, let’s dive into whether Solana can rebound from here or if investors should steer clear.

Remarkable ability to scale its network

One of the most interesting aspects of the Solana network I’ve dove into of late is this blockchain’s ability to scale. Indeed, the ability to scale has generally been a significant challenge for several blockchain networks, including Ethereum, for a long time now.

However, a few days back, a Bank of America analyst doled out some significant praise to Solana, specifically relating to this blockchain’s ability to scale its network. Ethereum prioritizes security and decentralization, but at the cost of scalability. This has resulted in higher transaction fees (in fact, in many cases larger than the transaction value being sent) and phases of network congestion. On the contrary, the average cost per transaction for Solana is only $0.00025 as of early this year.

Bank of America analyst Alkesh Shah points out that the steep cost advantage of SOL will enable it to snatch market share from ETH in areas like gaming and micropayments. He added that Solana’s formidable advantages in blockchain-based payments may make this crypto the “Visa of the digital asset ecosystem.” 

Developers undoubtedly appreciate the low-cost transactions and speed of Solana. Over 400 projects are being built upon this crypto’s network, and this figure will likely increase in the upcoming years. These projects are mainly focused on areas like non-fungible tokens and decentralized finance. A flourishing developer community often acts as a solid catalyst for token price appreciation. Also, it can help fuel sharp gains for potential investors, like what we saw over the past year.

Bottom line for Solana

Indeed, Solana’s positioning right now is solid. However, this is also a blockchain network that’s been under pressure in recent months, as network outages have been cause for concern among many investors.

Solana engineers released an update, thereby resolving a few incidents troubling network users. Also, the blockchain network pledged to improve further in the upcoming eight to 12 weeks. 

I think, right now, there’s a lot to like about how Solana is positioned. Sure, there will always be other blockchains looking to take market share. That’s always going to be the case. However, Solana’s speed and cost advantage is worth taking a look at.

As far as top tokens to buy heading into February go, Solana is a top pick of mine.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald owns Solana. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

Beware of bad investing advice.
Investing

2 No-Brainer Growth Stocks to Buy Right Now for Less Than $500

Both of these top Canadian stocks have impressive track records and years of growth potential, making them two of the…

Read more »

telehealth stocks
Investing

Got $100? 3 Small-Cap Stocks to Buy and Hold Forever

Given their solid underlying businesses and healthy growth prospects, these three small-cap stocks can deliver superior returns in the long…

Read more »

Aircraft Mechanic checking jet engine of the airplane
Investing

CAE Stock: Buy, Sell, or Hold in 2025?

With a record $18B backlog but a retiring CEO and Boeing delays clouding the outlook, is CAE stock's 6% dip…

Read more »

clock time
Dividend Stocks

Time to Buy This Canadian Stock That Hasn’t Been This Cheap in Years

This dividend stock may be down, but certainly do not count it out, especially as it holds a place in…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Is Brookfield Infrastructure Stock a Buy for its 5% Dividend Yield?

Brookfield Infrastructure's 5% yield is attractive, but it's just the tip of the iceberg for why it's one of the…

Read more »

senior man smiles next to a light-filled window
Dividend Stocks

Buy 4,167 Shares of 1 Dividend Stock, Create $325/Month in Passive Income

This dividend stock has one strong outlook. Right now could be the best time to grab it while it offers…

Read more »

Canadian Dollars bills
Stocks for Beginners

3 No-Brainer Stocks to Buy Under $50

A $50 investment every month or every week can buy you one share of these three stocks, and earn you…

Read more »

Rocket lift off through the clouds
Investing

Top Canadian Stocks to Buy Now for Long-Term Growth

These top Canadian stocks operate in high-growth sectors and are witnessing significant tailwinds, which will drive multi-year growth.

Read more »