Solana vs. Bitcoin: Which Cryptocurrency Will Gain Momentum in Q4?

Solana has outpaced Bitcoin returns in the last year. Can the cryptocurrency continue to gain momentum in Q4 of 2021?

Diagonal chain made of zeros and ones. Cryptocurrency and mining.

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The cryptocurrency space continues to attract investors all around the world due to the ability of these digital assets to generate exponential gains. While Bitcoin remains the largest cryptocurrency in the world with a market cap of over US$1 trillion, at the time of writing, Solana is fast gaining traction, as it’s now the seventh-largest digital currency valued at a market cap of US$44.4 billion.

The price of Bitcoin has increased by 406% in the last 12 months. Comparatively, Solana investors have returned a staggering 6,000% since October 2020. Let’s see which cryptocurrency has the potential to deliver outsized gains in Q4 of 2021 and beyond.

The Solana ecosystem is expanding

An open-source project, Solana was launched in 2020 and is used to provide decentralized finance, or DeFi, solutions. It is designed to expedite and facilitate the creation of DApp, or decentralized app. Solana is focused on improving scalability by the introduction of the PoH (proof-of-history) consensus with the PoS (proof-of-stake) consensus of the blockchain.

This hybrid model has attracted both individual and institutional investors to the cryptocurrency in the last year.

One of the key drivers of the rise in cryptocurrency prices is the accelerated pace of adoption of these digital assets. Solana has been successful in expanding its ecosystem, allowing it to gain traction in a highly disruptive space.

Recently, Chingari, which is one of India’s largest social media platforms, raised US$19 million from crypto investors. The investment round was led by Republic Crypto and included other investors such as Solana Capital, Kraken Ventures, and 11-11 Ventures.

Chingari has around 30 million MAUs (monthly active users) and 78 million downloads. It gained traction shortly after China’s TikTok was banned in India. Chingari confirmed the proceeds of the investment will be used to develop the social media platform as well as launch the $GARI token on the Solana blockchain.

The token will allow content creators to set up an online shop, create NFTs (non-fungible tokens), as well as provide a platform for fans to fund their preferred performers.

Chingari is well positioned to drive the crypto revolution in India with the Solana blockchain at the forefront. As several other projects are launched on the Solana blockchain, investors can remain optimistic about the long-term growth of this cryptocurrency.

Bitcoin is the safest bet for investors

There are over 6,000 cryptocurrencies in the world, which means it is difficult to pick a winning long-term bet. While most cryptocurrencies are backed by multiple use-cases, there are a few, such as Dogecoin, that were created as a joke.

Stock market investors generally place their bets on companies with large economic moats, leading market shares, and strong financials. But there is no fundamental way to value cryptocurrencies right now, and it would make sense to gain exposure in this high-growth segment by purchasing the digital coins that are market leaders.

Bitcoin has continued to touch record highs this year on the back of widespread adoption by enterprises and individuals. It is one of the most liquid cryptocurrencies in the world and has also entered mainstream investing via the introduction of exchange-traded funds, or ETFs.

The Foolish takeaway

Investors should understand investing in cryptocurrencies carry significant risks due to the lack of regulation and high volatility associated with this asset class. In case, you want to gain exposure to cryptos, you need to consider several aspects such as your risk appetite and exit strategy. For someone with a higher-risk appetite, investing in Solano and deriving multifold gains might be an option. Others can bet on heavyweights such as Bitcoin and still generate market-beating gains.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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