We recently compiled a list of the 10 Best Cryptocurrencies to Buy Now. In this article, we are going to take a look at where Solana (SOL) stands against the other cryptocurrencies.
Cryptocurrency is one of the most volatile markets as it mainly drives its value from Bitcoin (BTC), which is the biggest cryptocurrency. Bitcoin has almost 54% share of the crypto market with a market capitalization of $1.33 trillion, as of July 20. The market move depends on the overall movement of Bitcoin. Whereas, cryptocurrencies such as Ethereum (ETH) and XRP (XRP) are considered alternatives to Bitcoin and they sometimes tend to move opposite to Bitcoin. In addition, cryptos such as Ethereum and XRP have unique features and use cases. For instance, XRP’s money transfer network, Ripple, serves the financial services industry’s needs. XRP’s Ripple has collaborations with Banco Santander, S.A. (NYSE:SAN), Canadian Imperial Bank of Commerce (NYSE:CM), and Kotak Mahindra Bank Limited (NSE:KOTAKBANK), among others. These are some of the leading banks that use XRP’s RippleNet for swift, low transaction cost, and versatile exchange network transfer technology.
Around 13.7% of the population in the US owned cryptocurrencies in 2022, according to the US International Trade Commission. The US is one of the leading countries with the highest cryptocurrency adoption. In April 2023, there were almost 420 million global cryptocurrency users.
Crypto Market Overview
The cryptocurrency market capitalization stood at $2.40 trillion, as of July 20, 2024. The crypto market capitalization was less than half a year ago, around $1.20 trillion, as of July 20, 2023. On January 1, 2024, the market cap had surged to $1.66 trillion. The surge in the crypto market was because of the rise of Bitcoin, mainly driven by the approval of Bitcoin Spot Exchange Traded Funds (ETFs) by the US SEC and the Bitcoin halving event. These major developments have injected a new bullish sentiment among investors. The difference can be seen with the increase in the trading volume of cryptocurrencies. As per Coinmarketcap, the trading volume of cryptocurrencies was around $84 billion on July 20, 2024, compared to $36 billion a year ago.
Bitcoin halving is an important event that reduces the rate of issuance of new BTC and the rewards for successful bitcoin miners are cut in half. Almost 21 million Bitcoins will ever be produced and halving reduces amount of new supply of BTC which impacts the rate of new BTC coins. On April 20, the fourth Bitcoin halving took place. The immediate impact of the halving is felt by miners, who experience the block rewards cut in half. According to an analyst, Megan Stals, “Bitcoin trading volume generally sees the most significant increase in the 60 days prior to halvings, as interest builds and prices gain momentum.”
Bitcoin and Ethereum have experienced a slight improvement in their market dominance. On January 1, 2024, Bitcoin and Ethereum had a dominance of 52.08% and 16.50%, respectively. On July 20, 2024, Bitcoin dominated with almost 54% and Ethereum dominated with a 17% share. The Coinmarketcap Crypto Fear and Greed index shows a score of 60.06 compared to 67.58 on January 1, 2024. The CMC Crypto Fear and Greed Index by Coinmarketcap indicates the market buying and selling sentiment. A score closer to 0 means an extreme market fear and shows investors have oversold irrationally, while a score closer to 100 means an extremely greedy market and indicates a potential market correction. The score of 60.06 signals a slightly greedy market, however, it is to be noted that it is below the score of 67.58, at the beginning of the year when the market started a bull run.
Mark Cuban recently pointed out that if the US dollar declines as the global reserve currency, Bitcoin could become a ‘safe-haven’ globally. Countries suffering from hyperinflation are already investing in Bitcoin. Ukraine and Vietnam are two of the leading countries that use crypto and bitcoin the most.
Ethereum’s Squeezed Supply
Over $3 billion worth of Ethereum (ETH) has been removed from centralized crypto exchanges since the approval of spot Ether exchange-traded funds (ETFs) in the US on May 23. The Glassnode data shows that the supply of Ethereum held on exchanges is at its lowest level in years at around 10.6%. As per the CryptoQuant data, the total Ethereum on exchanges has plunged by almost 797,000 between May 23 and June 2, worth approximately $3.02 billion. The low supply of Ethereum on exchanges means that fewer ETH coins are available for sale. On May 28, The DeFi report crypto analyst Michael Nadeau said that Ethereum could take advantage of demand pressures compared to Bitcoin, as it does not have the same level of ‘structural sell pressure’ as BTC. Nadeau further added:
“ETH is a tech play on the growth of Web3. A ‘call option’ or ‘high-growth index for Web3 adoption.’ Whereas Bitcoin is ‘digital gold.’”
Web3 is a rising industry and is expected to bring in an annual revenue of $33.5 billion by 2030, as per the data by Grand View Research. In addition, Ethereum’s ETF has been approved by the SEC following the regulators’ approval of Bitcoin ETF in January 2024. The chief investment office at Bitwise, Matt Hougan, on the Ethereum ETF approval said:
“We’ve now fully entered the ETF era of crypto. Investors can now access more than 70% of the liquid crypto asset market through low-cost ETPs.”
Bitcoin Leads Crypto Funds Inflows
On June 3, CoinShares released its ‘Digital Asset Fund Flows’ weekly report which showed that the digital asset funds experienced a fourth consecutive week of inflows. The digital asset funds recorded $185 million in weekly inflows for the last week of May 2024, with total monthly inflows of around $2 billion. As of May 2024, the year-to-date inflow of capital in the crypto market has crossed $15 billion.
Bitcoin was the leading cryptocurrency with $148 million in investment flows for the last week of May 2024, while short Bitcoin funds experienced $3.5 million in weekly outflows. This reflects the bullish sentiment among BTC investors. In addition, Bitcoin’s total inflows for May 2024 accounted for $1.95 billion, taking the year-to-date tally to $17.74 billion. Ethereum experienced the second-highest inflows of $33.5 million in the last week of May 2024. Solana also saw a notable increase in weekly inflows, reported at around $5.8 million, taking the full month inflows to $24.8 million and year-to-date inflows to $35 million.
The most weekly inflows came from the US worth $130 million, despite Grayscale Investments outflows increasing to $260 million. Switzerland experienced the second-largest week of inflows at $36 million, while Canada had the third-highest inflows at $25 million in the last week of May 2024.
Big Players in the Crypto Market
CME Group Inc. (NASDAQ:CME) is one of the leading derivatives marketplaces comprising four exchanges including CME, CBOT, NYMEX, and COMEX. Each exchange offers a variety of global benchmarks across all major asset classes. The company allows clients to trade futures, options, cash, and OTC markets. Through CME Group’s marketplace, clients can optimize portfolios and analyze data to mitigate their investment risks. CME Group Inc. (NASDAQ:CME) also offers a wide range of products in all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products, and metals.
On July 4, CME Group Inc. (NASDAQ:CME) reported that its quarterly international average daily volume reached a record 7.8 million contracts in the second quarter of 2024, up by 23% year-over-year. All the asset classes played a major role in the record trading volume. Commodities saw notable growth, with metals up 50%, energy up 40%, and agricultural products up 25%. Here is what the Chief Commercial Officer of CME Group Inc., Julie Winkler, said:
“Our record Q2 international average daily volume was driven by significant increases in volume across all asset classes in EMEA and APAC, demonstrating how our clients turn to our products to hedge price risk.”
The company is reportedly planning to launch spot bitcoin trading aiming to cash in on rising demand and interest in the cryptocurrency sector from Wall Street. Following the approval of Bitcoin ETF and now Ethereum ETF, Wall Street is open to accepting crypto more than ever before. CME Group Inc. (NASDAQ:CME) already serves trading in bitcoin futures and is looking forward to allow investors to place spot trades. On February 9, CME Group Inc. (NASDAQ:CME) announced to expand its cryptocurrency derivatives offerings, Micro Bitcoin Euro and Micro Ether Euro futures. Assest managers have invested over $10 billion in cryptocurrencies including BlackRock, Fidelity, and Ark, among others. BlackRock’s CEO, Larry Fink, is ‘long-term bullish’ on Bitcoin.
CME Group Inc. (NASDAQ:CME) has strong fundamentals with an EBITDA margin of 68% and a ROE of almost 12%. The stock also has an impressive dividend yield of 2.33%. The company’s positive financial health reflects a positive outlook for the stock. Over the past three years, CME Group Inc. (NASDAQ:CME) has recorded positive free cash flows, positive operating income, positive net income, and exceptional revenue growth figures.
The stock is trading at 22 times its forward earnings, which is almost a 22.43% discount to its five-year average of 27.83. Jonathan Tepper’s hedge fund Prevatt Capital has a total stake of almost $23.68 million in CME Group Inc. (NASDAQ:CME), as of Q1 2024.
Crypto companies face a high level of volatility due to uncertainty in the market. Cryptocurrency firms have performed well in 2024 due to a strong year for cryptocurrencies. With this context, let’s take a look at the 10 best cryptocurrencies to buy now.
Our Methodology
In our methodology, we initially shortlisted the cryptocurrencies with market capitalization equal to or greater than $4 billion, as of July 20. We then calculated the year-to-date (YTD) returns and listed the top 10 cryptocurrencies with the highest year-to-date returns in ascending order, as of July 20.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A computer engineer working in a futuristic office, programming algorithms to mine cryptocurrency.
Solana (SOL)
Price on January 1, 2024: $101.51
Price on July 20, 2024: $$169.34
Year-to-Date Return: 40.05%
Solana is a public open-source project that offers smart contract functionality. Solana operates through the proof-of-stake and offers faster transactions due to its unique approach to adding timestamps to blocks. The network is dubbed the ‘Ethereum Killer’ because of its scalability and speed advantages over its competitors. Solana’s native token SOL has soared just over 40% in 2024 so far and is the fifth largest cryptocurrency in the world. Solana offers a wide variety of decentralized networks that can be built on the blockchain including NFTs, crypto exchanges, and crypto gaming, among others. Similar to Ethereum, Solana (SOL) doesn’t have a restricted maximum supply and has a current circulating supply of 464.50 million. Solana (SOL) is a promising blockchain platform with a focus on speed, security, and scalability. Solana is one of the best cryptocurrencies to buy now.
Overall SOL ranks 6th on our list of the best cryptocurrencies to buy. You can visit 10 Best Cryptocurrencies to Buy Now to see the other cryptocurrencies that are on hedge funds’ radar. While we acknowledge the potential of SOL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SOL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.