We recently compiled a list of the 12 Best Cryptocurrencies to Invest in According to Reddit. In this article, we are going to take a look at where Solana (SOL) stands against the other cryptocurrencies.
The past year was a wild ride for cryptocurrency investors. After the approval of spot Bitcoin ETFs in Q1 of the year, markets took some time to digest that the SEC has paved the way for approval of spot Ethereum ETFs also before giving them a go-ahead in May. As a result, spot Bitcoin ETFs managed to garner over $50 billion in combined assets in less than 6 months of trading. Some market experts believe this was the most successful ETF category ever launched.
Apart from the spot offerings, crypto-themed ETFs performed significantly well in 1H 2024. For example, First Trust SkyBridge Crypto Industry & Digital Economy ETF has seen a healthy run of over ~20% on a YTD basis. Blockchain-focused products have seen a lot of traction from enthusiasts. Amplify Transformational Data Sharing ETF went up by over ~19% on a YTD basis.
Al and Crypto- An Intersection You Should Know About
In recent months, Artificial Intelligence has been incorporated into the crypto world. AI tokens refer to cryptocurrencies directly associated with an Al venture. Al tokens demonstrate cryptocurrencies that are developed to support Al-based projects, applications, and services. These include decentralized Al marketplaces, and Al-driven decentralized autonomous organizations, among others.
The users are allowed to use tokens for the payment of services or access data on the platform. On the other hand, the platforms can make use of tokens in the form of rewards to incentivize users. Such tokens could be utilized to offer the holders some governance rights. CoinMarketCap reported that the market cap for artificial intelligence and big data cryptocurrency projects saw a healthy increase of more than ~70% in just a few weeks. This hints at the renewed confidence in crypto investors.
Regulation of Cryptocurrency and Related Exchanges
The meltdowns seen in the crypto industry, such as FTX, put a direct spotlight on the rules and regulatory concerns of the broader industry. The fall of the leading cryptocurrency exchange was primarily because of the lack of regulation at that time. However, government entities are now quite active in placing enforcement rules. The Securities and Exchange Commission (SEC) is the nation’s most active watchdog in the crypto market.
CNBC reported that the US has been one of the most active regulators who has enforced legal action against crypto companies. The Securities and Exchange Commission has sued two major crypto exchanges. The clear and well-defined regulatory standards can make the way for institutional investors, like banks, and asset management companies, to make investments in crypto assets.
As per a bi-annual survey conducted by KPMG in Canada and the Canadian Association of Alternative Assets and Strategies (CAASA), ~22% more financial services organizations decided to offer crypto-asset products and services to their client base in 2023 as compared to 2021. Also, ~26% more institutional investors included crypto-related assets in portfolios in 2023 as compared to 2021.
Coinbase highlighted that updated 2Q 2024 13-F filings demonstrated that there was a strong increase in institutional inflows in the US spot Bitcoin ETFs. This seems to be a “promising indicator” for the Bitcoin market as per the company. The recent 13-F filings revealed that institutional ownership of such ETFs saw an increase from 21.4% to 24.0% between Q1 of 2024 and Q2 of 2024.
Cryptocurrency Outlook
As per the United States International Trade Commission, the global revenues earned by tokenized asset exchanges equated to ~$26.5 billion in 2022. Of this, ~76% of the revenues came from cryptocurrencies.
The revenues from tokenized assets went up significantly in 2021 due to growth in nonfungible tokens and an increase in the price of major cryptocurrencies. McKinsey believes that total tokenized market capitalization is expected to reach ~$2 trillion by 2030 (excluding leading cryptocurrencies and stablecoins). This is expected off the back of the adoption by mutual funds (MFs), bonds and exchange-traded notes (ETN), loans, and securitization, along with alternative funds.
Globally, the crypto market capitalization exceeded $2.5 trillion (as per Forbes), with the world’s largest cryptocurrency setting a record high of over $73,000. Its market cap reached $1.4 trillion in mid-March 2024. The cryptocurrency market should reach ~$6.6 billion in 2024. Forbes also reported that the users in the cryptocurrency market should reach 107.30 million by 2025.
Growth in the cryptocurrency market should primarily be led by higher acceptance and adoption of cryptocurrencies by institutions and individuals, increased usage of decentralized finance (DeFi) platforms, advancements in blockchain technology, and higher usage for cross-border transactions.
Our methodology
We sifted through several communities, subreddits, and threads, and narrowed our list to the 12 best cryptocurrencies by selecting the trending ones. Finally, these have been ranked in ascending order of their market capitalization, as of August 29.
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A shot of someone securely accepting crypto assets as payment, showcasing the company’s payment solutions.
Solana (SOL)
Market capitalization as of August 29: $67.3 billion
Solana (SOL) is a cryptocurrency that was designed to work similarly to and improve upon Ethereum. This has been named after a small Southern Californian coastal city. It was the brainchild of software developer Anatoly Yakovenko.
Like Ethereum, Solana tokens can be purchased on most of the major exchanges. Its actual value is in initiating transactions on the Solana network, which has rare advantages. The Solana blockchain makes use of a proof-of-history consensus mechanism. The algorithm utilizes timestamps to define the next block in Solana’s chain.
Solana operates by using a combination of proof-of-history (PoH) and proof-of-stake (PoS) consensus mechanisms. The proof-of-history component represents the main element of the Solana protocol, and it is responsible for the majority of transaction processing. The PoS consensus behaves as the monitoring tool for the PoH processes, and it validates each sequence of blocks it produces. Its primary use case is to facilitate the creation of decentralized applications (DApps), with the main focus on decentralized finance (DeFi) solutions.
Solana’s distinctive scaling approach makes a strong case for those planning efficient blockchain solutions. Its focus on high-speed and low-cost operations enables it to execute thousands of transactions per second at a fraction of the cost of other blockchains. Between 1 September 2023 and 28 August 2024, the price of this token has seen a significant increase of over ~600%. Much of this increase was mainly led by the fact that it uses strong and efficient technology, has network stability, and has higher on-chain volumes.
Overall SOL ranks 4th on our list of the best cryptocurrencies to invest in right now. While we acknowledge the potential of SOL as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued 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.
