Solana‘s (CRYPTO: SOL) current price near $178 is down 21% over the last three months, making it significantly cheaper than before. This looks like a lucrative opportunity for investors who are willing to take a risk and buy the dip. Even if you’re only investing a moderate amount of money, say $3,000, there are still three solid reasons why it’s worth buying this coin right now instead of one of the many alternatives.
Here are the three reasons why Solana is a buy instead of a sell at the moment. Just be aware that these drivers probably won’t be in play forever.
Investors of scarce commodities sometimes fear the prospect of new supply coming onto the market. That makes sense, as the fair market value of an asset is inextricably linked to the amount of that asset in circulation. With enough additional supply that gets distributed quickly enough, a major price shock could occur.
For Solana, this issue is acutely important right now, and it looks like the worst fears of the chain’s investors didn’t happen. On March 1, 11.2 million SOL, equivalent to 2.2% of its total, worth around $2 billion, became unlocked and available for sale. The supply was disbursed as part of the bankruptcy proceedings for FTX, a now-defunct crypto exchange.
The price of Solana didn’t seem to have any reaction to the big scary catalyst passing. In other words, a majority of the investors who were disbursed their portion of the bankruptcy proceedings did not then go on to dump their Solana onto the market. And what would cause an investor to retain an asset they just got for free? The belief that the asset will be worth even more in the future.
In other words, Solana’s strength right now in the face of a bearish driver speaks to its quality as an asset that’s worth holding for the long term.
Solana’s most direct competitor, Ethereum, is going through a rough patch these days. With its leadership being widely criticized for failing to address sticky issues like high gas fees and slow transaction times, it’s undergoing a transition period to try to restore the faith of investors and its ecosystem’s developers alike.
Notably, Ethereum aims to be the crypto sector’s home for decentralized finance (DeFi), as well as for many other important segments like artificial intelligence (AI) coins. But Solana is angling for the same distinction, and every investment dollar that’s allocated to one of the two chains is one that doesn’t go to the other. At least for the moment, there is reason to believe it’s winning the competitive fight.