Many blockchain projects were developed to become an improved Ethereum alternative. That included creating an environment for building dApps on a platform that is faster, more scalable, and more efficient.
Solana turned out to be the strongest candidate to become the “Ethereum killer” when it launched in 2020. Today, you can find the SOL coin in over nine million wallets. Checking the SOL to USD ratio will show you if now is the right time to buy Solana for your portfolio.
If you already own Solana, we will discuss whether now is a good time to withdraw it. Our experts analyze recent performance and crucial factors influencing SOL’s price.
Solana’s Recent Performance
You can now purchase SOL at the price of $130. The project has a market cap of over $62 billion, and it’s in the top five cryptos by that ranking. The network has an infinite theoretical maximum supply. At this point, about 466 million SOL coins are in circulation, which is somewhat less than the total supply of 583 million.
Solana had an all-time high in November 2021. It was worth $260.06 then, so it’s lost about 48% of its value compared to that point. While that news isn’t great, that drop is much less significant than many other cryptos and approximately the same percentage as Ethereum.
SOL performed well during 2024 since it started the year at around $101. Significant leaps occurred in March and July, and the value exceeded $200 at one point.
It was a turbulent time for Solana in August 2024, with the total coin loss value set at around 6% in the last month. Early August has been particularly tough since negative funding rates and loss of confidence caused a 20% drop in less than a week. Solana bounced back during the rest of the month, but the first few days of September led to a new drop.
3 Factors to Consider Before Withdrawing SOL
Information is power in the trading world, and crypto isn’t an exception. That’s why reading up on the latest news and checking expert analyses is vital when deciding whether to withdraw SOL. The following factors are the ones that can strongly influence Solana in the near future.
1. Staking Yields and Rewards
Staking rewards have become a part of the Solana blockchain after the validators voted for it on the network. Those who own SOL can use the Mainnet Beta to stake their coins to one or multiple validators.
The reward varies and depends on multiple factors, starting with the chosen validator’s commission and uptime. Other factors influencing it include how many coins the network currently has staked and the inflation rate at a particular point.
The estimation is that Solana’s current staking rewards are approximately 5.41%. You might find some opportunities that go as high as 6.87%, so a lot depends on the timing. However, if rewards remain this stable and attractive, they can be an important factor in deciding whether to keep SOL. Instead of withdrawing coins, you can stake them and look forward to a decent profit.
2. Inflation Hedge Considerations
The global inflation rate in 2023 was approximately 6.9%. That’s not encouraging since it’s the highest rate since 1996. Investors are cautious and looking for the best options to hedge against that inflation rate repeating.
Experts remind us that token inflation is also a thing. However, they indicate it’s hard to compare rates directly between various assets. Solana has certain advantages, such as lower operational expenses than PoW networks.
These reasons are why investors think that Solana could be a viable hedge against inflation in turbulent times. A portion of those investing in other crypto convert funds to stablecoins when expecting a particularly volatile market. However, SOL could be a better option since it also has growth potential in the coming months and years. That being said, it’s also a higher risk because things could also take a wrong turn.
3. Network Outages and Performance Issues
The latest Solana outage occurred in February 2024. According to reports, the blockchain freeze lasted over five hours. An unknown issue caused a cluster to stop, and validators needed hours to restart the network. The engineers were quick in discovering the problem and releasing a patch.
It was not the first time Solana had performance issues. The estimation is that over a dozen stoppages occurred over the years. Some critics argue it’s because Solana is too centralized and doesn’t have an adequate range of options when it comes to validator clients. Another worry is that the public doesn’t believe Solana developers put network uptime as their priority. Instead, they focus on creating the code quickly.
All the above have caused some loss of trust among potential traders. Many are looking for alternatives, such as the top 3 altcoins to buy, worrying that Solana won’t recover after the next potential outage.
Should You Withdraw Your SOL Now?
The latest signs aren’t encouraging, but Solana developers are optimistic. They state that the network’s ecosystem has over 2,500 developers. Solana. The creators estimate that over 400K unique payers participate in over 30 million daily transactions on Solana. The 24-hour trading volume has been stable or increasing, with the volume/market cap ratio set at about 3.80%.
Visa recommended Solana and highlighted its low costs with a high transaction throughput. It’s not the only major collaboration that Solana has, and some other notable names include Audius and Shopify.
All this is good news, but many investors are still unsure whether to keep Solana. Ultimately, the decision is yours. Network outages that cause sudden coin drops and token value volatility are a risk. On the other hand, tempting staking rewards are why holding Solana is also a viable option.
The best way to go is to analyze how SOL fits into your portfolio. If you believe there are better investment options or you need extra funds, go with it. However, we don’t recommend getting rid of Solana just because it had a bad few days. Most price predictions are positive in the long run, and Solana should remain a major player in the crypto market.
