Solana (CCC:SOL-USD) was briefly the fourth-largest cryptocurrency with a market capitalization that got as high as around $78 billion. This put SOL just behind Binance Coin (CCC:ADA-USD) in the list of the largest cryptos, according to CoinMarketCap. It has slipped a bit since then, now in sixth place with a market cap of $73 billion.
Solana was larger than Cardano (CCC:ADA-USD) which is a similar, but less popular “Ethereum killer,” or competitive alternative to Ethereum (CCC:ETH-USD). After a 24 hour jump of 9%, Cardano has a market value of nearly $77 billion.
In addition, Solana is now neck and neck with and slightly larger than Tether (USDT-USD), a U.S. dollar stablecoin. This stablecoin tries to stay close to one U.S. dollar in terms of its price. Tether has a market value of $71.9 billion. Its market value increases as more Tether coins are purchased.
Solana on a Tear
Solana has been on a tear, to say to least. But its prospects still look quite good. It can provide investors and blockchain participants performance and a viable alternative to Ethereum. This is what is powering SOL tokens so much higher.
At $240 as of Nov. 9, Solana is now up 12% in the past week. And in the last two months, Solana is now up over 33% compared to its Sept. 9 price of around $180.
This shows how incredibly popular this crypto has become. One reason is the Total Value Locked (TVL) value for Solana, which has skyrocketed. TVL measures the total dollar value of smart contracts using Solana crypto.
I wrote about this recently in an article that describes Solana’s TVL comparative metrics. But the underlying reason for the rise in TVL for Solana is its perceived superior usefulness compared to Ethereum.
Transaction Fees and Speed Issues
The fact is, Ethereum transaction takes a comparatively long time to get processed. In addition, its “gas” fees, or transaction fees are very high.
Just to give you an example, I recently had to exchange some Ether into Tether and then later used that Tether to buy another crypto. However, I also had to transfer my Tether to another exchange.
The whole process took me about an hour. In addition, I had to endure at least 5% in transaction fees, between transferring my Ether into Tether, then transferring that through an Ethereum platform to another exchange.
This was because Coinbase Global (NASDAQ:COIN), where I kept my Ethereum, does not seem to allow any kind of transfer other than the Ethereum platform when you try to transfer Tether to another network.
Moreover, the process, which took an hour, including waiting at least 15 minutes for my Ethereum to transfer into Tether, was extremely frustrating.
In addition, I lost money by later transferring the Tether into the desired cryptocurrency. All of this is highly inefficient.
That is where Solana comes in. It allows users to have much lower fees and much faster transaction times. It makes users want to stay within the Solana ecosystem, especially for their DeFi (decentralized finance) apps and NFT (non-fungible tokens) purchases.
Where This Leaves Solana
Just several days ago I wrote that Solana would have a $76.9 billion market cap using my estimate of its value using TVL metrics. Guess what? It reached that market value and likely will again.
So at this point, I suspect that its TVL is going to go much higher and that is what the market anticipates. As a result, I believe that Solana could have another 50% or so to gain, with a $114 billion market value, sometime before the end of the year.
Depending on how many tokens are released to get to this market value, it could mean that Solana would rise to $378 by that time. Investors in cryptos are going to gravitate to this crypto as a result.
On the date of publication, Mark R. Hake did not hold any security mentioned in the article, either directly or indirectly. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.