The S&P 500 (SNPINDEX: ^GSPC) market index has seen a total return of 25% in 2024. That’s a fantastic year for the stock market, but it can’t hold a candle to the crypto market.

According to CoinMarketCap, the market value of every cryptocurrency added up to $1.65 trillion at the end of 2023. The combined market cap is up to $3.30 trillion on Dec. 19, which works out to a doubling in less than 12 months.

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Crypto pioneer Bitcoin (CRYPTO: BTC) gained 138% over the same period. Smart contracts innovator Solana (CRYPTO: SOL) showed a 101% gain, just ahead of the crypto sector as a whole.

But the picture changes if you zoom out a little. Starting from the doldrums of December 2022, Solana stands head and shoulders above Bitcoin and the stock market with a 2,000% price gain:

Solana Price data by YCharts

So Solana has a recent history of outperforming Bitcoin, even though the larger cryptocurrency enjoyed a pretty fantastic return in the same time span. It would be pretty awesome if that two-year trend could continue in 2025 and beyond.

Is this a good time to rebalance your crypto holdings, backing out of Bitcoin to buy more Solana instead?

Solana’s surge: A rebound from FTX fallout

First, let me point out that Solana’s recent price surge started from a very low point.

Caught up in the financial meltdown of Sam Bankman-Fried’s FTX crypto exchange, Solana had recently plunged from $259 to $10 per token in about a year.

It’s not easy to recover from a drop of that magnitude, but still a simpler task than skyrocketing from a higher starting point. Bitcoin also suffered from the FTX debacle, but its price drop was much smaller than Solana’s. In other words, Solana’s stellar gains from the summer of 2022 were assisted by an artificially low starting price.

Solana’s real-world applications

On the upside, Solana is poised to perform. The cryptocurrency is still a top performer when it comes to executing smart contracts in a hurry, which is good for automating financial transactions and other asset-based changes.

In particular, Solana’s high-speed contracts come in handy when you’re managing a large volume of these decentralized programs at the same time in a time-pressure situation. Mobile games spring to mind, alongside blockchain-based trading platforms and non-fungible token (NFT) sales. Someday, maybe you’ll even buy chewing gum and gas with a quick Solana transaction. That’s the kind of stuff a cryptocurrency with smart contracts and rapid transaction settlement can do.

Therefore, Solana’s return to the top-10 list of large and popular cryptocurrencies makes sense. Owning some Solana is probably a good idea in 2024, as the token seems likely to become widely used in real-world applications over the next couple of years.

Bitcoin’s top growth catalysts

But can Solana outperform Bitcoin at this juncture? Perhaps, but I’m not so sure. Bitcoin has too many growth catalysts going on:

• Bitcoin recently updated its economic function for the fourth time, halving the amount of coins that are issued when a new block of Bitcoin transaction data is processed. These halvings have historically led to impressive price gains about a year later, and there’s no reason to believe that this cycle will be any different.
• Exchange-traded funds (ETFs) based on up-to-the-minute Bitcoin prices are about a year old. Their introduction was expected to bring lots of new capital into the crypto market, using tools already familiar to any stock investor. About 5.2% of all Bitcoins have found their way into the spot Bitcoin ETFs so far, led by the massive iShares Bitcoin Trust (NASDAQ: IBIT). The capital inflow picked up the pace in November, though this week’s disappointing economic reports led to the largest single-day outflow so far. Even Bitcoin and its ETFs are still quite volatile.
• November’s Bitcoin enthusiasm referenced the election results. The incoming Trump administration brings a more crypto-friendly attitude to the Capitol and White House, and the president-elect included cryptocurrency support in his campaign. Among other things, this regime change could lead to the creation of a national Bitcoin reserve, which would boost the cryptocurrency’s price by making it even more scarce on the open market.

I could go on, boring you to tears with technical data and promising market trends, but you get the idea: Bitcoin isn’t standing still. Solana will need to work hard to beat this behemoth in the long run.

I prefer to own more Bitcoin than Solana

It may sound funny, given Bitcoin’s long history of wild price swings and continued volatility, but the digital gold is evolving into a solid value-holding asset. There are no “safe bets” in the crypto market, but Bitcoin gets pretty close. A sharp turn of events could turn Solana into a footnote in crypto history, but it takes a massive sea change to make Bitcoin obsolete.

As a long-term investor, I would rather have a large Bitcoin holding and a smaller, speculative Solana investment than the other way around. To be clear, I own a bit of both. Still, Bitcoin’s future price trends will make a much bigger difference to my nest egg than Solana’s ever could.

And that’s the way I like it. Your mileage may vary, but Bitcoin looks like the stronger investment idea to me.

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Anders Bylund has positions in Bitcoin and Solana. The Motley Fool has positions in and recommends Bitcoin and Solana. The Motley Fool has a disclosure policy.