Buy Solana, But Not Because It’s on Robinhood

Solana - Buy Solana, But Not Because It’s on Robinhood

Source: Rcc_Btn / Shutterstock.com

Solana (SOL-USD) is one of the most volatile altcoins in the crypto universe. Some altcoins drive adoption through utility, and some do it through community. In the case of Solana there’s a little bit of both.

The reason why investors have been flocking to Solana is, in a word, scalability. Solana is one of many cryptos vying to be a significant challenger to Ethereum (ETH-USD). And the coin has the attention of the development community who appreciate the transaction speed and the lower fees that are hallmarks of the Solana network.

Those hallmarks are a key reason why Solana is becoming a fixture in the fast-growing NFT marketplace. But ironically, it’s Solana’s appearance on the OpenSea NFT platform that caused a significant drop in the SOL price. The reason was that on-chain activity on the Solana blockchain network, including sales of NFTs on OpenSea, plunged. However, over time this is likely to be a significant catalyst for Solana.

Additionally, Solana is now available on Robinhood. I won’t deny that this will, perhaps, increase the Solana community. Robinhood has over 17 million monthly active users (MAUs). And the investing platform is taking a rigorous approach in deciding which cryptocurrencies make the cut. In theory, that makes Solana more appealing because it’s been vetted.

However, while being listed on Robinhood may be bullish for the coin over time, in the short term I believe Solana and many altcoins will have problems. Robinhood flourished during the pandemic. Millions of investors, many of whom were flush with stimulus money, flocked to the platform. And it wasn’t hard to make money in a bull market.

However, a market and investment analyst who I hold in high regard noted that the only problem with Bitcoin (BTC-USD) and Ethereum is that an entire generation of young investors is facing a down market for the first time. That suggests to me that the appetite for cryptocurrencies may not be as robust as many think. And that’s particularly the case for investors who aren’t already in the crypto market.

If investors want to see what volatility in the crypto market looks like, I would point them to the price chart of Solana. In just the last 12 months, SOL has climbed from approximately $25 to over $260. But today it’s trading around $100. That means that the expression “timing is everything” applies to the Solana crypto more than most.

Nevertheless, many investors will see SOL as a cheaper and faster version of Ethereum. That may change when Ethereum completely moves to a proof-of-stake (PoS) consensus. But for now, that utility — more than where the coin is listed — could make Solana a buy.

On the date of publication, Chris Markoch held a LONG position in ETH. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/solana-has-a-reason-for-investors-to-buy-but-not-robinhood/.

©2022 InvestorPlace Media, LLC