- A report from Standard Chartered suggests that Solana is overvalued compared to Ethereum based on key metrics.
- The U.S. election could influence the performance of Solana, Ethereum, and Bitcoin.
Solana (SOL) is projected to lead the cryptocurrency market in growth by 2025, outpacing both Ethereum (ETH) and Bitcoin (BTC), according to a recent report by Standard Chartered. The British multinational bank predicts that Solana could rise five-fold in value especially if Donald Trump wins the forthcoming US presidential election.
Geoffrey Kendrick, Global Head of Digital Assets Research at Standard Chartered, presented new valuation metrics for layer-1 blockchains with a focus on Solana and Ethereum. He compared Solana’s current market capitalization to Ethereum when it comes to several historical indicators. Solana’s market cap to fees ratio is 250x compared to Ethereum which is at 121x.
This high valuation is based on the market expectations of Solana’s future growth potential, which Kendrick expects to be between 100 to 400 times the current throughput of Solana in the coming years. This growth potential, he believes, is easier to achieve under a Trump administration given the president’s friendly disposition towards digital assets.
Report Contrasts Token Supply and Staking Yields
While Ethereum has been the leading layer-1 blockchain network for quite some time now, the increased activity and the growth of Solana’s token price have raised the question of whether the network might soon dethrone Ethereum. However, according to Standard Chartered, SOL may be overpriced at the moment in comparison to Ethereum.
Also, Solana’s token supply is increased at a rate of 5.5% per annum while Ethereum has a rate of 0.5% per annum. This directly affects real staking returns where Solana has a yield of 1% and Ethereum has a yield of 2.3%. Another advantage that is in favor of Ethereum is the availability of its developers. While 38% of blockchain developers are working on the Ethereum ecosystem, only 9% are working on Solana.
Impact of U.S. Election on Crypto Regulations
The report also looks at how the U.S. regulatory policies may change in the aftermath of the elections. If the former president Donald Trump were to win, then. In that case, the analysts predict a more positive environment for the cryptocurrency market, and increased possibilities of the approval of spot-based Solana exchange traded funds (ETFs).
Based on this assumption, SOL could do better than ETH and BTC. On the other hand, if the new government is led by Kamala Harris, then the regulation could be tighter, with bitcoin likely to lead, ethereum and solana to follow.
However, Standard Chartered remains optimistic about cryptocurrency in general, which is in contrast with the two previous forecasts. The bank believes that Ethereum will trade at $7,000 by the end of 2025 if Harris is the president and up to $10,000 if Trump is still in power. At the same time, Bitcoin is expected to jump to $200,000 by the same year-end, regardless of the election results.
