Traders determine that the season has started after bitcoin’s price peaks and people take profits to buy into smaller tokens that are more speculative but potentially rewarding. This results in altcoins outperforming the largest crypto. The smell of altcoin season is in the air.
While many investors are casting a wide net and taking positions on a variety of different projects, Ran Neuner, the cofounder and CEO of blockchain investment fund Onchain Capital, is very excited about one crypto right now. It’s solana (SOL), a token that’s widely considered an ethereum competitor.
The season now appears to be playing out. Cryptos excluding bitcoin like polkadot and ethereum are retracing back to their previous peaks, and others like cardano and terra are reaching new highs. Meanwhile, bitcoin’s performance this year lagged more than 80 altcoins as of Friday, according to CoinMarketCap.com.
Neuner got into crypto in 2014 after discovering bitcoin. Shortly after, he became bullish on ethereum, a Layer-1 blockchain that offers smart contracts. And in 2018, he witnessed ether explode in value after it went from around $300 to $1,300.
“The biggest success story of 2017, 2018
is actually ethereum. Ethereum outperformed bitcoin in that period by a lot, and it came from nowhere,” Neuner said.
There are two things powering ethereum right now: decentralized finance, or DeFi, and non-fungible tokens (NFTs). Both of these sectors have caught on like wildfire from both the institutional side and young retail investors.
This means Ethereum will have some fierce competition, especially because it has scaling problems and high gas fees, Neuner said. It’s undergoing multiple upgrades to address these issues. However, he believes the world will need more than just one blockchain to support the various applications coming to town.
Neuner sees this as insight for what may come both in the near and far future. Seeing that these first two major use cases of the blockchain have been highly popular, there will subsequently be more demand for blockchains that support smart contracts.
That’s the source of his excitement for Solana, the blockchain second to Ethereum in terms of NFT explosions.
Why solana is ‘the biggest opportunity in blockchain since 2018’
Solana is similar to ethereum, except that it’s much faster and costs a fraction of the price per transaction. And, it’s drawing NFT developers and buyers to its platform in droves. Neuner adds that a number of big names are backing solana, including Sam Bankman-Fried, founder and CEO of the crypto exchange FTX, and Multicoin Capital, a crypto investment firm.
“I think what we’re about to see is this virtuous cycle of, there’s a lot of money in Solana. Therefore, more brainpower is going to be attracted to Solana to build amazing applications. Therefore more money is going to flow into Solana and it creates a network effect,” Neuner said. “And so I think Solana must be the biggest opportunity in blockchain since 2018.”
Neuner told Insider he holds long-term positions in both ethereum and solana but recently sold off about 40% of his ether holdings to buy more solana.
Besides solana, cardano (ADA) is another Layer-1 crypto that can support smart contracts. However, Neuner notes that solana is technically cheaper even though it’s trading at a drastically higher price. Both hit record highs on Friday, with Solana near $145 (up more than 7,550% this year) and cardano above $3 (up 1,607%).
Similar to calculating the market capitalization of stocks, you can learn the value of a crypto protocol by multiplying the number of tokens in circulation by its price. Cardano has the third-largest market cap while solana is seventh, according to CoinMarketCap.com.
“This is one of the most important concepts which you have to grasp in Breaking News:just because the price of one token seems to be cheaper doesn’t mean that there is more value in it,” Neuner said.
For the average investor, Neuner still recommends diversifying across a variety of platforms that offer similar use-case. That means having positions in ethereum, solana, cardano, avalanche (AVAX), and polygon (MATIC).
Another distinction between both is that solana has already proven its capabilities in smart contracts, while investors are waiting on cardano to begin deploying them.
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