The S&P500 (SNPINDEX: ^GSPC) market index has achieved a total return of 25% in 2024. That’s a fantastic year for the stock market, but it can’t match the crypto market.
According to CoinMarketCap, the market value of each cryptocurrency was $1.65 trillion at the end of 2023. The combined market capitalization is $3.30 trillion as of December 19, doubling in less than twelve months.
Crypto pioneer Bitcoin (CRYPTO: BTC) increased by 138% in the same period. Smart contracts innovator Solana (CRYPTO: SOL) showed a gain of 101%, just ahead of the crypto sector as a whole.
But the image changes if you zoom out a little. From the doldrums of December 2022, Solana stands head and shoulders above Bitcoin and the stock market with a price gain of 2,000%:
So Solana has a recent history of outperforming Bitcoin, even though the larger cryptocurrency enjoyed some pretty fantastic returns over the same period. It would be pretty great if this two-year trend could continue into 2025 and beyond.
Is this a good time to rebalance your crypto holdings and withdraw from Bitcoin and buy more Solana instead?
First of all, I would like to point out that Solana’s recent price increase started from a very low point.
Caught in the financial collapse of Sam Bankman-Fried’s FTX crypto exchange, Solana had recently fallen from $259 to $10 per token in about a year.
It’s not easy to recover from a drop of that magnitude, but it’s still an easier task than skyrocketing from a higher starting point. Bitcoin was also affected the FTX debaclebut the price drop was much smaller than Solana’s. In other words, Solana’s stellar profits from summer 2022 were supported by an artificially low starting price.
On the plus side, Solana is ready to perform. The cryptocurrency is still a top performer when it comes to quickly executing smart contracts, which is good for automating financial transactions and other asset-based changes.
Solana’s high-speed contracts are particularly useful when you’re managing a large volume of these decentralized programs simultaneously under time pressure. This includes mobile games, alongside blockchain-based trading platforms and non-fungible token (NFT) sales. One day you might even buy gum and gasoline with a quick Solana transaction. That’s the kind of thing a cryptocurrency with smart contracts and fast transaction settlement can do.
Therefore, Solana’s return to the top 10 major and popular cryptocurrencies makes sense. Owning a Solana is probably a good idea in 2024, as the token is likely to see widespread use in real-world applications in the coming years.