In 2023, Solana (Code: SOL) was one of the best-performing cryptocurrencies, surging over 900%, easily outpacing the 150% rise. Bitcoin (Cryptocurrency: BTC).There were even hints that Solana was on track to overtake it. Ethereum (Crypto: ETH) As the second most valuable cryptocurrency in the world.
But this year, the story has changed. Yes, Solana is still up 80% year-to-date, but there are serious questions about its current valuation. With that in mind, let's take a closer look at his two key factors that could determine Solana's price trajectory over the next nine months.
meme coin mania
The main factor currently pushing Solana up is meme coin mania. The signboard dog of this boom is Bonk (Crypto: Bonk), which soared more than 1,000% in less than 30 days last year. But there are plenty of other cryptocurrencies that have made similarly impressive gains, including another meme token with a dog in a hat logo that has risen 1,300% this year.
Seemingly out of nowhere, Solana has emerged as the blockchain of choice for new meme coins. As a result, new get-rich-quick meme coins seem to be minted every day.
On the other hand, meme token mania has led to a surge in activity and development on the Solana blockchain, which has driven up all of Solana's core metrics. For example, the number of wallets holding Solana tokens has skyrocketed, daily trading volumes are off the charts, and his daily trading volume on Solana's decentralized exchange is now higher than that of Ethereum's decentralized exchange. It exceeds the quantity.
On the other hand, meme coin mania has sparked a wave of speculative activity that may or may not be sustainable. Things got so out of control that Solana co-founder Anatoly Yakovenko felt he needed to step in and tell people to “stop this.” He was particularly concerned about people sending Solana coins to anonymous digital wallet addresses in hopes of getting their hands on new meme coins at pre-sale prices (i.e. before they begin trading on exchanges). . For stock investors, this is like wire transfers to anonymous traders in New York City who claim to have access to hot new companies before they go public.
Solana can't end meme coin mania completely. Because that was one of the key factors behind its popularity over the past 12 months. But something needs to be done about some of the common scams in the crypto market, such as the dreaded “rag pull” (where the creator of a new meme coin suddenly disappears along with investors' funds).
Solana's mobile strategy
The second important factor to consider is Solana's mobile strategy. This is one area where Solana has a competitive advantage over other major blockchains, including Ethereum. Last April, Solana officially announced the $1,000 Saga, a “crypto phone” optimized for the Solana blockchain. Initially, sales of this device were slower than expected, so Solana finally cut the price by his 40% just to attract buyers. Surprisingly, it turned out that most people were not willing to pay the same price for an untested encrypted phone as they would for a traditional smartphone.
However, Saga sales suddenly picked up late last year (thanks in part to meme coin mania), and Solana announced a more affordable second-generation Saga in early 2024. Pre-orders for this new phone recently reached 100,000 units, and some analysts now believe that Solana's annual sales volume of 250,000 units will allow him to break even on his mobile strategy. Masu. This is certainly a big bet, but if it pays off, it could be crucial to maintaining Solana's price trajectory.
Of course, the next step would be to find a “killer app” for that encrypted phone. This is a completely new app for blockchain and cryptocurrency users, and it should be an app that is not available on traditional smartphones. According to investment firm VanEck, such a cryptocurrency killer app could unlock significant value for Solana, with its price potentially soaring to more than $3,200, nearly 17 times its recent price.
What's next for Solana?
How and whether Solana solves these two key issues will be critical to Solana's growth and sustainability. If you find a winning strategy, the price can skyrocket. Otherwise, crypto investors may find that the price of Solana can collapse just as easily as the price of the most speculative meme coin.
I'm still bullish on Solana's prospects. An all-time high of $260 appears to be within reach, with some predicting that Solana could soar to $1,000 during this crypto rally. As long as you are aware of the risks and volatility involved, Solana may be worth a closer look in your crypto portfolio.
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Dominique Basurto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Solana. The Motley Fool has a disclosure policy.
This cryptocurrency skyrocketed in 2023. Will it continue to shine in 2024? Originally published by The Motley Fool
