Institutional adoption of Solana has been slower compared to retail investors.
Key Takeaways
- Solana's transaction efficiency far surpasses Ethereum, offering a 3000% increase in processing speed and drastically lower fees.
- VanEck's analysis suggests a significant market cap rise for Solana, potentially reaching 50% of Ethereum's valuation.
Solana’s technological prowess could propel its market cap to reach half of Ethereum, according to a recent report from VanEck’s Market Vector. The report also projects that Solana’s price may rise to $330, which means an increase of over 50% from its current level.
“Based on third party research, Solana has the potential to reach 50% of Ethereum’s market cap, with predictions placing SOL at a price of USD 330,” the report wrote.
“These forecasts are derived from technical models available on platforms like TradingView, suggesting a possible seismic shift in the cryptocurrency landscape if this market cap increase occurs,” it added.
As detailed, the layer 1 (L1) blockchain outperforms Ethereum in terms of key metrics like transaction capabilities, user base, and transaction fees.
Solana processes 3,000% more transactions than Ethereum, has 1,300% more daily active users, and offers transaction fees that are nearly 5 million percent cheaper, the report states. For years, the blockchain has positioned itself as a strong competitor to Ethereum thanks to its enhanced efficiency and scalability.
Yet Solana’s market cap remains just 22% of Ethereum’s, the report highlights. Data from CoinGecko shows that Ethereum’s market value is over $313 billion while Solana’s is around $70.6 billion.
Some of the reasons behind that are slow institutional adoption and hesitancy to rotate capital.
The report points out that when it comes to institutional adoption, Solana is lagging behind Ethereum in institutional investment since Ethereum’s head start has established it as a familiar choice for institutions.
Moreover, institutions may be hesitant to move large amounts of capital away from established assets like Ethereum, even if Solana offers advantages.
The report suggests that investors should consider diversifying their investments across multiple L1 blockchains, including Ethereum and Solana, to mitigate risk and capture upside.
In the long run, the growth of decentralized finance, stablecoins, and payments is key drivers of adoption for both Ethereum and Solana, according to the report. Recent developments in decentralized exchanges and stablecoin transactions indicate the expanding use cases for crypto assets.
