The Top Cryptocurrency You Need to Buy in April

Solana is a cryptocurrency that gained significant momentum last year. Here’s why it should be part of your shopping list right now.

The equity markets are expected to remain volatile in 2022 given the Federal Reserve is on track to increase interest rates six times this year. Investors have already started liquidating stocks trading at a steep valuation and are reassessing the underlying multiples.

Similar to growth stocks, the cryptocurrency market has also experienced a pullback. Despite the widespread adoption of these digital assets, the crypto space is still at a nascent stage, resulting in unpredictable price movements.

The two cryptocurrencies by market cap, Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) are down 40% from all-time highs, making them attractive to the contrarian investor. While I am bullish on the long-term prospects of cryptos, you need to allocate just a small portion of your capital (between 3% and 5%) towards this disruptive asset class.

Let’s see why Solana (CRYPTO: SOL) should be part of your cryptocurrency portfolio right now.

Solana is branded an Ethereum killer

Similar to Ethereum, Solana’s blockchain network is also designed to support dApps (decentralized applications). These applications allow peer-to-peer interaction without any intermediary. Ethereum remains the most popular network to host dApps but Solana is fast gaining traction in this space.

Solana was launched in 2020 and the SOL token is up 10,570% in less than two years. One of the key catalysts for the uptick in the prices of SOL is the speed of the blockchain network. Currently, the Solana network can process 65,000 transactions per second compared to Ethereum, which can process between 15 and 30 transactions per second.

Solana validates transactions using a PoS, or proof-of-stake, mechanism, where developers stake the SOL token to complete the validation process. Further, it also uses the proof-of-history concept where timestamps are embedded into transactions, accelerating the validation process. Due to its robust validation mechanism, Solana’s gas fees are just a fraction of a penny, making it an ideal bet for micro-transactions and NFTs.

The SOL token is valued at $33.2 billion

Due to its staggering returns, Solana is among the 10-largest cryptocurrencies in the world, valued at US$33.2 billion by market cap. However, SOL is currently trading 60% below all-time highs.

While it’s difficult to value cryptocurrencies, you can analyze staking rewards provided by the underlying blockchain network. Solana pays a staking reward of 5.8% compared to Ethereum’s reward of 4.8%. Solana deducts a 9.8% fee from the reward compared to Ethereum’s fee of 10.9%. However, the adjusted reward for Solana, which accounts for the growth in token supply, is just 0.94% compared to Ethereum’s adjusted reward percentage of 4.36%.

There are several projects built on the Solana blockchain including the recently announced Solana Pay, which is a decentralized peer-to-peer payments solution. The dApp will enable real-time settlement of funds at a low cost, which is extremely beneficial to merchants.

It will be almost impossible for Solana to replicate its historical gains. But as additional projects are onboarded on its blockchain network, the demand for the SOL token is bound to increase, allowing investors to derive market-beating returns over time.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum.

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