Got $500? 1 Cryptocurrency to Buy Hand Over Fist in 2027
Solana is still a great long-term investment if you can ignore the near-term noise.
Solana's (SOL +1.77%) price hit a record high of $294 on Jan. 15, 2025. But as of this writing, the cryptocurrency trades at $106. Like many other cryptocurrencies, Solana lost its luster as inflation, rising interest rates, geopolitical conflicts, and other macro headwinds drove investors toward more conservative investments. However, Solana could still be a great place to put $500 (or more) you can afford to lose -- since it still has plenty of upside potential.
What sets Solana apart from other cryptocurrencies?
Solana isn't mined with an energy-intensive proof-of-work (PoW) consensus mechanism like Bitcoin (BTC +0.80%). It was built as a proof-of-stake (PoS) blockchain -- like Ethereum (ETH +1.50%) -- which doesn't support mining.
As a PoS blockchain, Solana supports staking (locking up tokens to earn rewards) and smart contracts (for developing decentralized apps and other tokenized assets). That makes it similar to Ethereum, but it accelerates transaction processing with its own proof-of-history (PoH) mechanism, which timestamps transactions before they're validated.
That upgrade enables Solana's Layer 1 (L1) blockchain to process 1,000 to 3,700 transactions per second (TPS). Ethereum's L1 blockchain can only process about 15 to 30 TPS, while its Layer 2 (L2) rollups -- which bundle together its transactions and process them off-chain -- can process about 200 TPS.
Solana's superior speed is attracting many developers, and it's now the second-largest developer-oriented blockchain after Ethereum. The larger its developer ecosystem grows, the more developers will use Solana to pay their transaction fees, and Solana's value will rise.
A growing number of fintech companies -- including Circle, Visa, PayPal, and Stripe -- have also begun using Solana's blockchain to settle stablecoin transfers, tokenize assets, and launch new cryptocurrencies. Moody's also recently integrated its industry-standard credit ratings services directly into Solana's blockchain to seamlessly rate tokenized bonds and fixed-income securities.
Last year, the first spot price ETFs were launched in the U.S. and Canada. Yet it has a market cap of only $62 billion, compared to Ethereum's $297 billion.
If the macro environment stabilizes and the Fed stops raising rates, the crypto market should warm up again. As a smaller altcoin, Solana could deliver greater gains than Bitcoin, Ether, and other "blue chip" tokens when the next crypto summer begins.
The increased adoption of stablecoins and tokenized RWAs (including stocks, bonds, real estate, art, and other assets) could also turn Solana into a major rail for financial institutions. So while Solana might remain volatile over the next year, it's still a smart idea to accumulate this oft-overlooked token as the macro headwinds weigh down the broader crypto market.
