It’s important to think a realistic long-term view when it comes to the future performance of Solana (SOL).
While the cryptocurrency has seen impressive gains in the past, investors should not assume it will necessarily replicate those kinds of returns going forward.
Since August 2023, we’ve witnessed a 15% annualized inflation rate in the Solana token supply, with over 60 million new SOL tokens entering the market. This rapid expansion of the circulating supply is a significant factor to consider when evaluating Solana’s potential for future price appreciation
Let’s dig deeper below!
Solana’s Past Performance No Guarantee of Future Results
It’s true that Solana has delivered remarkable 25x returns since the last bear market, when it was trading around $8. However, the landscape has changed dramatically since then. In October 2021, when Solana reached its all-time high of $260, the circulating supply stood at 301 million tokens.
Fast forward to today, and that figure has ballooned to 461 million tokens — a staggering increase of 161 million.
While Solana’s fast transaction speeds and widespread adoption are undeniable strengths, the ongoing dilution of the token supply is a critical factor that cannot be ignored.
“Now, I can almost hear the protests: ‘But Solana is the future! It’s fast, cheap, and user-friendly!’ Wake up, my friend. You’re living in a fantasy. All that speed and affordability comes at a steep price, and it’s being paid directly from your wallet. The data doesn’t lie; the costs are astronomical.”
The billions of dollars flowing into the Solana ecosystem each year are, in essence, being used to fund this inflationary token issuance, which may limit the potential for dramatic price appreciation in the future.
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Just think about it: Solana crashed 43% in just six days during what was supposed to be a “bull market.” What do you think is going to happen when the bear market truly takes hold?
If you’re holding a bag of SOL, it’s probably feeling pretty heavy right now. My advice? Take some profits and buy some Bitcoin.
Now, before you start calling me a FUDster, understand that what I’m just I’m exercising caution as the path ahead may be more challenging than some anticipate.
Rather than blindly chasing the next big thing, it may be prudent to consider a more diversified approach that includes allocations to more established cryptocurrencies, such as Bitcoin.
By maintaining a balanced and well-researched investment strategy, you can better manage the risks and potentially weather the ups and downs of the crypto market more effectively.
Thanks for journeying with me! Let’s keep this adventure going.
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