Is Solana About to Have Its Biggest Year Yet?

2026 has been a year to forget for Solana (CRYPTO: SOL). It's declined nearly 40% year to date and underperformed Bitcoin and Ethereum (CRYPTO: ETH). But could it bounce back in the second half of the year and deliver much bigger returns?

What sets Solana apart from other cryptocurrencies?

Solana, like Ethereum, is a proof-of-stake (PoS) blockchain that supports the development of decentralized apps and other crypto assets through smart contracts. To differentiate itself from Ethereum, Solana integrates its own proof-of-history (PoH) mechanism (which timestamps transactions before they're validated) into its PoS blockchain to accelerate its transactions.

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That upgrade enables Solana to process nearly 1,200 real-time transactions per second (TPS), compared to Ethereum's 24 TPS on its Layer-1 (L1) blockchain. Solana also has a theoretical max speed of 65,000 TPS, while Ethereum tops out at 238 TPS.

Solana's higher speeds attracted tens of thousands of developers, making it the second-largest developer-oriented blockchain after Ethereum. Solana served 17,708 developers as of last September, according to Electric Capital, while Ethereum hosted 31,869 developers.

Solana also processed 25.3 billion transactions in the first quarter of 2026, compared to about 200 million transactions on Ethereum. That's not an apples-to-apples comparison, since Solana's total transactions also include its validator vote transactions (for the network to agree on its own state) that aren't present in Ethereum's blockchain. Nevertheless, Solana is still growing rapidly and emerging as a major competitor to Ethereum.

But will Solana bounce back this year?

Several catalysts could drive Solana's price higher this year. Its Alpenglow upgrade, expected in the third quarter of 2026, will further boost its speeds and raise its theoretical limit to 100,000 TPS. That should expand its lead against Ethereum, which is trying to catch up to Solana with Layer 2 (L2) rollups that accelerate its transactions by processing them off-chain.

Solana already handles nearly a third of all stablecoin transfers -- thanks to its partnerships with Circle, Visa, PayPal, Stripe, and other payment companies -- and that ongoing expansion could draw in even more investors and developers. It's also increasingly used to tokenize real-world assets (RWAs). Therefore, any favorable changes to the proposed CLARITY Act for cryptocurrencies -- which aims to regulate stablecoin yields and tokenized RWAs -- could drive Solana's price higher this year.

Solana's first staking ETFs, which allow investors to stake (lock up) their tokens to earn yields similar to interest, were also approved last year. Those new ETFs could broaden Solana's appeal among retail and institutional investors who don't want to deal with crypto exchanges.

However, I think Solana will still struggle to recover this year as long as the persistent macro headwinds drive investors away from cryptocurrencies. So while Solana could eventually soar higher, that recovery probably won't happen until the broader crypto market warms up again.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, PayPal, Solana, and Visa. The Motley Fool recommends the following options: short June 2026 $50 calls on PayPal. The Motley Fool has a disclosure policy.