Want to Buy Ethereum While It's Cheap? Consider Solana Instead.

Ethereum (CRYPTO: ETH) holders are probably pretty irate right now, considering the coin's decline of 48% over the last three years. For enterprising buyers, that dip looks like it could be a tasty opportunity to buy a bunch of it while it's cheaper than before -- assuming it recovers, that is.

But there's more than one good argument for why it would make more sense for those investors to buy Solana (CRYPTO: SOL) instead. Let's look at one of the simplest ones.

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Cash doesn't lie

First, let's establish the context of evaluating Ethereum against Solana. Ethereum's market cap is $211.9 billion, whereas Solana's is $57.6 billion, or around 27% of the size. That doesn't necessarily imply anything about the growth potential of one over the other, but it does give an idea of the value of the tokens on their chains.

On that front, stablecoins are a particularly important type of token to pay attention to, as they represent real fiat currency that's tokenized and stored on a chain. In a very direct way, each dollar of a stablecoin is in theory interchangeable with one dollar of fiat currency. So when investors park their stables on a chain, they're doing so with the intent to either gather a yield on their cash, or to temporarily hold cash where it will be convenient to later invest in the chain's projects.

It's also possible for investors to bridge their stablecoin assets from other blockchains such that they can spend or invest money that they had originally stored elsewhere. So the data on which chains are getting the most bridged stablecoin volume are a handy way to determine where people are interested in making future investments.

Ethereum currently hosts $125.2 billion in stablecoin value, whereas Solana only has $12.5 billion. But there's $135.1 million in stablecoins from other chains that have been bridged to Solana, and a scant $1.3 million that have been bridged to Ethereum.

It's true that, proportionally speaking, the volumes of money being bridged to Solana are modest compared to the total values of stablecoins on either chain. Still, Ethereum is the second-largest cryptocurrency by market cap, and there is practically no inflow of new stablecoins to its chain. That means investors are not bringing in their stablecoins from elsewhere because they're excited to buy tokens on Ethereum. Instead, they're vastly more interested in getting exposure to projects in Solana's ecosystem, even though it's substantially smaller in terms of its value right now.

Although it hasn't fallen by as much as Ethereum in the same period, Solana's price is down 35% compared to 12 months ago. So it's also on sale, if you have a long-term mindset for your investments.

Now's a risky time to be doing much of anything

Solana's other advantages over Ethereum, like being cheaper and faster, are also worthwhile reasons to consider purchasing it. Nonetheless, it's obvious that this moment is a perilous time to invest heavily in most cryptocurrencies.

While risks stemming from regulatory effects in the U.S. appear to be receding and almost in the rearview mirror, risks stemming from tariff-related disruptions to the domestic economy are very high. People won't invest in risk assets if they're concerned about their safer investments getting pounded, nor will they invest much at all if they expect to become unemployed or to face more difficult economic conditions in the near term. This makes the next few months, and perhaps even the next few quarters, very uncertain, even considering that Solana's likely to have an edge over Ethereum due to its technical advantages and investor interest in its ecosystem.

What this means is that if you were just now convinced that Solana is a better asset than Ethereum to hold for the long term, you should temper your enthusiasm a bit. Solana is still worth buying, and Ethereum is still on the back foot relative to its competition. Just don't bet the farm right now. If you decide to make an investment, make it a small one to start. Spread the total value of your position out over a few days', weeks', or even months' worth of purchases to reduce the effect of price volatility on any given day.

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