Is Solana a Good Buy in 2023?

The Solana (CRYPTO: SOL) cryptocurrency has been on a wild ride since launching in the spring of 2020.

Solana (CRYPTO: SOL) has been on a wild ride since launching in the spring of 2020. It traded for less than $1 per coin at first, soared to $259 in the crypto boom of 2021, then fell back below $10 in December 2022. More recently, Solana tagged along with Bitcoin (CRYPTO: BTC) is 2024, matching the larger cryptocurrency's moves with eerie precision most of the time. On the evening of December 18, one Solana coin was worth $202:

Solana Price data by YCharts

That's all in the rearview mirror by now, and it's time to look forward into 2025 and beyond. Is Solana a good buy, an overvalued sell, or a reasonably priced cryptocurrency you should hold if it's already in your crypto portfolio?

Solana's rocky history

The steep price swings in recent years had their reasons. When the FTX crypto-trading service broke down in a spectacular fashion, it held a significant amount of Solana tokens that became entangled in the collapse. Investors quickly lost trust in Solana, and it didn't help that the scandal was unveiled in the middle of an inflation crisis and a crypto winter.

It took time to rebuild that damaged investor trust, even though the cryptocurrency itself didn't break the FTX platform. However, Solana provides valuable features that still inspired many app developers to use its in new projects. The cryptocurrency supports smart contracts like Ethereum (CRYPTO: ETH), but can execute these contracts faster and with lower fees. That's one way to recover from the winter of FTX-based distrust.

The developer interest reached a bullish tipping point about a year ago, resulting in dramatically higher transaction volumes and usage fees. There was a brief slowdown over the summer, followed by another intense spike of Solana usage and a consistent boost to average daily transaction counts.

In other words, people appear to have forgiven Solana for its unfortunate FTX connection and moved on to use the token in blockchain-based apps. It's a popular back-end for stablecoins and non-fungible tokens (NFTs), and its quick transaction settlement makes Solana useful in everyday payment systems. You may not have seen these blockchain tools in action yet, but they are quietly growing in popularity as consumers, businesses and regulators become more comfortable with cryptocurrencies.

The Solana project's ambitions

Often seen as a so-called "Ethereum killer," Solana can handle many projects based on smart contracts. The Solana Foundation sees the coin as an integral part of the oncoming Web3 vision, where individuals hold more power over the internet experience than social network operators.

Instead of "killing" the original smart contracts system, Solana's backers hope to win a significant portion of next-generation app designs in fierce competition with Ethereum and others.

The surging usage statistics suggest that Solana is well on its way to a long-term success story. There is no shortage of high-performance cryptocurrencies today, and even Ethereum has boosted its execution speed in recent years. Still, Solana's platform offers a proven combination of speed, security and a collaborative developer community.

Final verdict: You may want to buy Solana right now

This cryptocurrency is here to stay. Solana has already built a robust user community and a very large market footprint. According to CoinMarketCap data, Solana is the sixth most valuable cryptocurrency today with a $99 billion market cap. That's comparable to household-name stocks such as coffee giant Starbucks (NASDAQ: SBUX) or tobacco titan Altria (NYSE: MO). Not too shabby for a four-year-old project that already survived one massive value meltdown.

Solana's price has doubled this year, trailing behind Bitcoin in recent weeks. The main reason behind this lagging performance is that investors are stepping away from risky high-growth assets these days. The artificial intelligence (AI) boom is cooling off and economic regulators are taking steps to avoid another inflation-based panic.

These are real market concerns, and current or prospective Solana investors should not ignore them. That said, the bearish attitudes shouldn't last long and many crypto investors expect leading crypto names to keep rising in 2025. At the same time, web3 ideas look more relevant every day and Solana should benefit greatly if and when that simmering vision transforms into a few killer apps.

Solana deserves your consideration these days, unless you're convinced that cryptocurrencies are inherently and hopelessly worthless. But then you probably wouldn't have read this far. So I recommend taking a closer look at Solana's technical features and its role in the cryptocurrency ecosystem. Those findings may inspire you to grab a couple of Solana tokens.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

Should you invest $1,000