Should you forget Bitcoin and buy Solana instead?

the Standard & Poor’s 500 (^ GSBC 1.09%) The market index saw a total return of 25% in 2024. It’s a great year for the stock market, but it can’t hold a candle to the cryptocurrency market.

According to CoinMarketCap, the market cap of each cryptocurrency added up to $1.65 trillion at the end of 2023. Their combined market cap reached $3.30 trillion on December 19, which could double in less than 12 months.

Crypto pioneer Bitcoin (Bitcoin -0.28%) By 138% during the same period. Smart contracts Innovative Solana (Sol -6.93%) It showed gains of 101%, ahead of the cryptocurrency sector as a whole.

But the picture changes if you zoom it out a little. Starting out of the doldrums in December 2022, Solana stands head and shoulders above Bitcoin and the stock market with 2,000% price gains:

Solana price Data by YCharts

So Solana has a recent history of outperforming Bitcoin, even though the larger cryptocurrency has enjoyed a very impressive return in the same time period. It would be pretty great if this two-year trend continues in 2025 and beyond.

Is this a good time to rebalance your crypto holdings, and dip into Bitcoin to buy more Solana instead?

Solana Boom: Rebound from FTX Fallout

First, let me point out that the recent rise in Solana prices started from a very low point.

Caught up in the financial collapse of Sam Bankman-Fried’s FTX cryptocurrency exchange, Solana recently dropped from $259 to $10 per token in about a year.

It’s not easy to recover from a drop of this magnitude, but it’s still an easier task than jumping from a higher starting point. Bitcoin also suffered from FTX disasterBut its price drop was much lower than that of Solana. In other words, Solana’s impressive gains from the summer of 2022 were supported by an artificially low starting price.

Solana applications in the real world

On the upside, Solana is poised to perform well. Cryptocurrency is still the best performer when it comes to executing smart contracts in a hurry, which is good for automating financial transactions and other asset-based changes.

In particular, Solana’s high-speed contracts become useful when you are managing a large volume of these decentralized programs at the same time in a time pressure situation. Mobile gaming comes to mind, along with blockchain-based trading platforms and non-fungible token (NFT) sales. Someday, maybe you’ll buy gum and gas through Solana’s Express Deal. This is the kind of thing a cryptocurrency with smart contracts and fast transaction settlement can do.

Therefore, Solana’s return to the top ten list of large and popular cryptocurrencies makes sense. Owning some Solana will probably be a good idea in 2024, as the token seems likely to be widely used in real-world applications within the next couple of years.

The most important catalysts for Bitcoin growth

But can Solana outperform Bitcoin at this point? Maybe, but I’m not sure about that. Bitcoin has a lot of growth catalysts going on:

• Bitcoin recently updated its economic function for the fourth time, halving the amount of coins issued when a new block of Bitcoin transaction data is processed. these Half They have historically led to amazing price gains about a year later, and there is no reason to believe this cycle will be any different.
• Exchange-traded funds (ETFs) based on updated Bitcoin prices are about a year old. Its introduction was expected to bring a lot of new capital into the cryptocurrency market, using tools already familiar to any stock investor. About 5.2% of all bitcoins find their way to… Spot Bitcoin ETFs So far, huge lead iShares Bitcoin Trust (Ebit 0.16%). The pace of capital outflow picked up in November, although disappointing economic reports this week led to the largest single-day outflow yet. Even Bitcoin and its ETFs are still very volatile.
• Bitcoin enthusiasm in November pointed to the election results. The incoming Trump administration has brought a more crypto-friendly stance to the Capitol and the White House, and the president-elect has included support for cryptocurrencies in his election campaign. Among other things, this regime change could create a national reserve of Bitcoin, which would boost the price of the cryptocurrency by making it scarcer on the open market.

I could keep pestering you with technical data and promising market trends, but you get the idea: Bitcoin doesn’t stand still. Solana will need to work hard to overcome this giant in the long run.

I would rather own Bitcoin than Solana

It may seem funny, given Bitcoin’s long history of wild price swings and constant volatility, but digital gold is evolving into a powerful asset of value. There are no “safe bets” in the cryptocurrency marketBut Bitcoin is getting very close. A sharp turn of events could turn Solana into a footnote in cryptocurrency history, but it would take a sea change to make Bitcoin obsolete.

your Long term investorI would rather have a large holding of Bitcoin and a smaller investment in Solana for speculation rather than the other way around. To be clear, I own a little of both. However, future price trends for Bitcoin will make a much bigger difference to me than Solana ever will.

And that’s the way I like it. Your mileage may vary, but Bitcoin seems like the stronger investment idea to me.