I’m confident the Solana (CCC:SOL-USD) bulls have found all the information they need to sleep comfortably at night.
However, Solana is down 29% over the past week alone due to a combination of reasons; I’m not sure you ought to be risking your hard-earned capital on SOL-USD.
There’s a time and place to buy Solana. Unfortunately, this is not one of those times.
Here’s why I feel this way.
Crypto Has Gone to The Bears… For Now
As I said in the introduction, Solana’s price is down over the past week for several reasons. The first is pretty straightforward: we’re in a crypto bear market right now.
Coindesk recently discussed the four things to do in a crypto bear market. I won’t bore you with the details. However, as Coindesk reported, $328 billion in market capitalization was erased between Jan. 18 and Jan. 25, a figure higher than the entire value of Pfizer (NYSE:PFE).
“According to data from Intotheblock, 28% of bitcoin investors and over 31% of ethereum investors are ‘out of the money’ right now – meaning the prices of both cryptocurrencies are now less than what they paid for them. For other assets like Cardano, more than 87% of investors are in the red,” Coindesk stated on Jan. 25.
There’s not much Solana management can do about a bear market except to grin and bear it, as my father used to say.
Solana Can’t Get Its S**T Together
However, what’s unacceptable is the ongoing reliability issues its blockchain network continues to face. You can’t in one breath say you process a bazillion more transactions per second than Ethereum (CCC:ETH-USD) and then constantly crap the bed.
The latest issue had to do with “excessive duplicate transactions,” stated Solana’s Jan. 22 blog post.
The current issue experienced by validators is due to excessive duplicate transactions. Engineers have just released 1.8.14, which will attempt to mitigate the worst effects of this issue. These forthcoming releases are aimed at improving the state of the network, with more improvements expected to roll out in the next 8-12 weeks.
As of Jan. 23, it believes the incident is resolved. Maybe so. But this is the fourth issue to plague the blockchain network. So is it any wonder that SOL-USD has lost 64% of its value since its November 2021 high of $260.06?
According to Bloomberg, Avalanche (CCC:AVAX-USD) is holding up much better with no reported issues related to its blockchain’s performance. AVAX-USD is down only 10% over the same period.
It’s time for Solana to up its game.
As Far As Cryptocurrencies Go, I Like Solana
The last time I wrote about Solana was in November. I concluded that it and Cardano (CCC:ADA-USD) provided the kind of tangible utility I would look for if I were to dip my toe in cryptocurrencies.
“In July, I stated that Solana was providing significant utility in its decentralized finance (DeFi) DApps. It continues to contribute to more than 300 projects to advance the cause,” I wrote on Nov. 12, 2021.
“I think a case can be made to own both Solana and Cardano (CCC:ADA-USD) because they both provide the kind of utility that most other cryptos fail to deliver.”
Am I wrong to think this? Is Solana a poser? Should all Solana owners sell and throw the proceeds behind Avalanche?
I don’t have an answer for you.
However, you wouldn’t keep going to the same movie theater if it kept losing power in the middle of a film. This applies to faulty internet, poor wireless service, etc. I could be here for days providing illustrations of poor service you wouldn’t put up with for more than a minute.
“Oh but its blockchain so it’s okay” because it’s a so-called “new and innovative” technology.
Screw that.
The Bottom Line
It’s funny. In my November article, I referenced a Solana price prediction of $5,057 by the end of 2030. So a $10,000 investment would be worth more than $209,000 in nine years, a compound annual growth rate of 40.2%.
Oh, to dream.
For now, however, I’m taking Solana off the table. It is no longer a crypto I’d consider investing until it gets its act together.
Sure, relative to its November high, SOL-USD is cheap as sin. But maybe it’s cheap for a reason. I’ll continue to search for answers.
I cannot recommend buying at this point.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.
