Is Solana (SOL) a Buy Right Now?

Solana (CRYPTO: SOL), one of the world's fastest-growing developer-driven cryptocurrencies, set a record high of $295 on Jan. 18, 2025. But today, it trades at about $73. Let's see why this hot token fizzled out, and if it's worth buying as a contrarian play.

The bulls vs. the bears

Solana is a proof-of-stake (PoS) blockchain that supports staking (locking up tokens to earn yields) and smart contracts (used to develop decentralized apps). That makes it similar to Ethereum (CRYPTO: ETH), the world's largest PoS blockchain, but Solana timestamps transactions with its own proof-of-history (PoH) mechanism before they're validated.

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That upgrade makes Solana's Layer-1 (L1) blockchain much faster than Ethereum's L1 blockchain. That's why Solana is now the world's second-largest developer-driven PoS blockchain after Ethereum, and it's gaining new developers at a faster rate than Ethereum.

A growing number of fintech companies -- including Circle, Visa, PayPal, and Stripe -- are using Solana's blockchain to settle stablecoin transfers, tokenize assets, and launch new cryptocurrencies. Moody's even recently integrated its industry-standard credit ratings into Solana's blockchain to cover tokenized bonds and fixed-income securities.

The bulls believe Solana's Alpenglow upgrade this year will further boost its network speeds, improve its security, and widen its moat against Ethereum and other PoS blockchains. They also expect the passage of the CLARITY Act, which remains stalled in the Senate, to set clearer regulations for stablecoins, tokenized assets, and decentralized apps. Those rules could drive more companies to run their financial services on Solana's blockchain rails. More AI agents could also use Solana to fund their own autonomous workflows.

The bears argue that Solana relies too heavily on speculative meme coins to drive network activity and faces significant competition from Ethereum's L2 networks. They'll also point out that Solana is inflationary because it creates new tokens to reward validators and stakers. Moreover, fears of interest rate hikes are still chilling the crypto market -- and Solana could struggle to recover as quickly as blue chip tokens like Bitcoin and Ether.

Is Solana worth buying right now?

Solana's more than 40% decline this year indicates the bears are winning that debate. It still has plenty of irons in the fire, but it probably won't attract much interest until inflation cools, interest rates decline again, and the CLARITY Act passes. I'd keep an eye on Solana, but I wouldn't rush to buy it in this challenging cryptocurrency market.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Moody's, PayPal, Solana, and Visa. The Motley Fool recommends the following options: short September 2026 $47.50 calls on PayPal. The Motley Fool has a disclosure policy.