INTRODUCTION
Over the past year, Solana has provided some remarkable returns indeed. Just look at the following table:
Furthermore, a brief look at the price chart for Solana demonstrates an absolutely beautiful upward trend:
Let's just face facts. Solana has great fundamentals and looks like a fabulous investment on paper [See, e.g. Nagoda, K. Should I buy Solana (SOL) in 2021?. (Accessed November 12, 2012)]. Couple the fact of great fundamentals with the returns realized and it seems you have a match made in heaven between Solana and your portfolio. It is not hard to see the allure of Solana with its super fast processing times and cheap transaction fees; just compare it to the turtle Ethereum with its masochistic fees.
So now you are thinking, what is this author raising a red flag about with respect to Solana. Has he gone nuts?
Well go pour a cup of coffee and read on my friends.
THERE EXISTS AN OVERCONCENTRATION OF SOL COINS IN THE WALLETS OF LARGE INVESTORS
Although this situation was known prior, recently your author came across a chart driving this overconcentration home:
It is well known that we often talk about whales holding Bitcoin and Ethereum (among other cryptocurrencies). However, on a percentage basis, the Bitcoin and Ethereum whales pale in comparison to the concentrated Solana holdings.
In the Solana ecosystem these whales have a concentrated holding of 48% of the distributed Solana coins. These whales are comprised of venture capital firms and Solana insiders (founders, co-founders and team members). They were able to amass this high concentration of SOL coins because the venture capital firms were able to buy in early prior to the coin's distribution to community members. The overall Solana community only holds approximately 38% of Solana's distributed coins.
This situation raises serious price stability and sustainability concerns in the Solana coin, especially for the small retail investors who are much more likely to hold the coin long term. And this situation has become exacerbated due to recent events.
A widely shared video from a podcast discussion between several well-known venture capitalists on their investments in Solana’s native token SOL has raised eyebrows in the crypto community, with many questioning their intentions.
[Vold, F. Crypto Traders Shocked That Solana Whales Can Dump Their Cheaply Bought SOL Too. (Accessed November 12, 2021)].
It is a very short video, just under a minute, and if you are already a small retail investor in Solana or are considering investing in Solana, it is critical that you watch this video. Here is the Twitter link to this video: Oh you know, just a bunch of billionaire capital allocators joking about pump dumping #Solana. Nah.. (Accessed November 12, 2021).
Just imagine the devastation that could be experienced by the small retail investors in Solana should this small group of joking whales randomly decide to dump their large stakes. Not only will there be extreme losses exhibited, but the healthy spirit of FOMO surrounding Solana resultant from its price movement and great fundamentals will be dashed.
Your author here penned the content piece for 'Should I Buy Solana (SOL) in 2021' for the Leo Finance Solana Coin Guide which has already been cited herein. At that time, your author personally was extremely bullish on the Solana project and was personally interested in investing. Well, your author is now very glad that he did not pull the trigger and invest in Solana. For the whales to be joking about dumping their shares to the detriment and sheer disregard of the small retail investor has soured the entire project. Talk about deflating one's spirits.
Two responding Tweets to the whales video set the tone for the close of this article:
and
When dealing with anything related to Solana, it is imperative that you be aware that you are not playing on a level field with the jokester whales. They are in control of the outcome of your investment - if they hold their stake and you buy on the dips/sell some on the highs you are likely to do well - but if they dump large numbers of tokens on the market, price will drop precipitously causing you big Solana losses.
CONCLUSION
In no way is your author saying Solana is a bad investment but to safely proceed with an investment in it you must play the game well. Buy the dips and book profits often. Always remember that the Solana game is rigged and the playing field is not level. And the most important advice of all, never invest more than you can comfortably be able to lose.
Good luck to you all.
DISCLAIMER - The information herein contained is presented for educational purposes only and should not be considered investment advice. Prior to making any investment, it is highly recommended that you do your own diligent research.