Given that Solana (CCC:SOL-USD) is the sixth biggest crypto by market capitalization and is approaching a $60 billion cap, it makes sense to pay attention.
That market cap is important because Solana has rapidly burst through plateau after plateau. In mid-August that figure hit $20 billion. Solana reached $40 billion a few weeks later. Fast forward two months and it has been flirting with $60 billion. Suffice it to say investors are clamoring to understand if it can continue its rapid growth. In my opinion, the answer to that question is a resounding yes. One of the primary reasons for that is institutional interest in all cryptocurrency.
Capital Flowing In
There’s currently a lot happening which is bolstering institutional confidence in the cryptocurrency market. Capital is flowing into the market based on news relating to both established forces including Bitcoin (CCC:BTC-USD) and altcoins.
In the last week a record breaking $1.47 billion of institutional investor capital flowed into the cryptocurrency market. Bitcoin accounted for the majority of those inflows, much of it due to trading in the first Bitcoin ETF.
Those capital inflows haven’t only benefitted established players including Bitcoin. Rather, altcoins, primarily Solana and Cardano (CCC:ADA-USD), have also benefited. Those two altcoins were singled out as the biggest beneficiaries of the capital surge following the Bitcoin ETF news.
Here too, there’s good news for Solana as it relates to its rival, Ethereum (CCC:ETH-USD). As a recent article noted: “Cardano and Solana recorded the highest inflows for the week for altcoins. Leading altcoin Ethereum had recorded a 3rd consecutive week of outflows from the digital asset, suggesting waning faith in Etheruem.”
It’s no secret that Ethereum’s position is under attack. A lot has been written about both Solana and Cardano and their ability to chip away at Ethereum’s dominant position. In fact, it was the third straight week of outflows from ETH. That is especially troubling in light of the fact that there is so much positive news otherwise relating to capital inflows into crypto. But the overall thrust is that it benefits from the news which further justifies its continued upward momentum.
What do Pundits Expect?
There is reason to remain very optimistic about Solana. It hasn’t carved out the sixth biggest market capitalization by accident.
Simetri, a company which produces analytical reports about crypto, notes that Solana won’t likely unseat Ethereum. That said, Simetri believes that it has a leading position in the space moving forward: “Even though it entered a saturated market Solana was able to establish a competitive advantage. The project features fast transactions along with a decent user and developer experience. So far, the team’s approach has been professional and efficient. If it does not change, Solana will take one of the leading positions in its space.”
That’s largely in line with the hype that has surrounded Solana throughout 2021. That hype is based on two parameters which set it apart: speed and cost.
Growing With Reason
The reason that Solana has been tapped as a competitor to Etehreum’s dominant position is based on speed and cost.
Solana boasts a 400 millisecond block time. That compares favorably to the 15 second block time of Ethereum. In other words, Solana can produce 2.5 blocks, or data files each second.
It takes Ethereum 15 seconds to produce a single block. So by the time Ethereum finishes producing a block, Solana can produce 37.5 of them.
The same favorable comparison is true as it relates to transaction costs. Transactions completed via Solana cost less than a penny. Ethereum transactions currently cost $7.509.
What to Do
It’s therefore likely that Solana will continue its upward momentum. There’s a lot of positive news behind Solana.