Now Trading at Its Lowest Level Since December 2023, Is Solana a Buy, Sell, or Hold?

At about $64, Solana (CRYPTO: SOL) is priced 76% below its January 2025 peak. In the current crypto bear market, it hasn't exactly bucked the downward trend, nor has it kindled much enthusiasm among investors.

So, at these levels, is Solana a buy, sell, or hold?

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Why has the selling gotten this bad?

Solana's struggle isn't an isolated phenomenon; $250 billion has been wiped from crypto's market value since late May.

A hawkish Federal Reserve, alarmed by inflation being stoked by the U.S.-Iran conflict, is making the macro environment very uncertain, which has historically been bad for crypto. Similarly, a white-hot stock market for artificial intelligence (AI) and semiconductor stocks has gutted investors' risk appetite for crypto, as there's evidently plenty of upside to be found in comparatively less risky plays.

Furthermore, Solana is currently carrying plenty of its own baggage.

Since 2024, it has become crypto's meme coin casino, where launchpad projects spin up meme tokens that are built to dump on the last buyer. Worse, Drift, its largest decentralized finance (DeFi) protocol, lost about $285 million in April to North Korean hackers. That's a type of breach that many crypto natives rightfully fear could be exacerbated significantly by newly launched AI models that excel at cyberintrusion.

And after a run like this, it's no wonder that people are asking whether crypto is worth owning at all, as in many circles the entire sector (and Solana in particular) has become synonymous with losing money to fraud, theft, or plenty of plain old downside risk.

The dust will eventually settle

Despite the above, Solana is far from being done for.

It posts the highest real-world throughput of any major chain, handling over 1,800 transactions per second (TPS) as of June 10, with its transaction finality expected to drop toward a fraction of a second once this year's Alpenglow upgrade fully deploys. It also hosts most of the crypto sector's on-chain tokenized equity trading activity. By value, though, that segment is worth just $1.4 billion across all chains, of which Solana holds $341.3 million, both of which are rounding errors against the $120 trillion in global stocks.

Another catch is that activity on the network does not automatically enrich the people who hold Solana. The chain's transaction fees cost a fraction of a cent on average, and only a fraction of each fee is removed from circulation, so only a huge volume of activity would move SOL's price, and that's before even accounting for a constant drumbeat of fresh issuance that could slightly dilute holders over time.

So what's the right move here?

For most people, the best approach is to hold onto what you have and sit tight. For those who already hold a diversified mix of assets and who can stomach another 30% drop in Solana's price, it could be worth buying, assuming you're comfortable with hanging onto your coins for at least five years.

Alex Carchidi has positions in Solana. The Motley Fool has positions in and recommends Solana. The Motley Fool has a disclosure policy.