Solana Could Reach 50% of Ethereum’s Market Cap by Dominating DeFi and Payments, Says VanEck

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VanEck’s report highlights Solana’s potential to double its market cap, challenging Ethereum with its low fees, fast transaction speeds, and higher transaction volume.
Solana’s price could experience another explosive rally, with analysts predicting up to a 170% surge.

Digital asset manager VanEck recently published a report noting that Layer 1 blockchain network Solana remains quite undervalued in comparison to its Ethereum. While the Ethereum market cap stands at $315 billion, the Solana market cap is just at $71 billion. Thus, VanEck believes that Solana can reach at least half the market cap of Ethereum, i.e., 2x from the current levels.

However, to make this possible, SOL will need to double down on its strengths, which include low fees, fast transaction speeds, etc. The report published by VanEck’s research firm MarketVector compares Solana with Ethereum across different metrics.

Amid other technological advancements and growing institutional interest, the Solana blockchain has experienced remarkable growth, enhancing its market visibility. The report from MarketVector notes:

When comparing Ethereum and Solana, the data is striking. Solana processes 3,000% more transactions than Ethereum, has 1,300% more daily active users, and its transaction fees are nearly 5 million percent cheaper. These are monumental differences that showcase Solana’s potential efficiency and scalability advantages.

Additionally, the report also highlights some of the key areas like Defi, stablecoins, and payments, where Solana can challenge Ethereum. Solana can challenge Ethereum in terms of speed and efficiency, thereby gaining an edge in this massively expanding market.

“Another major use-case is lending and borrowing within the DeFi space, a sector expected to continue growing at a rapid pace. Payments and remittances also hold massive potential, especially with Solana’s lower fees and faster transaction times,” VanEck stated. Big players like Franklin Templeton have chosen Solana blockchain to launch its mutual fund, reported CNF.

Solana (SOL) Price Eyes Explosive Rally

After surging past $200 earlier this year in the first quarter of 2024, the Solana (SOL) price saw a 40% retracement, moving all the way to $120 before resuming the uptrend. As of now, the SOL price is trading at $152 with a market cap of $71.3 billion.

On the technical chart, SOL is showing a similar price action to that of the year 2021, when it crossed the crucial resistance level of $141.82. Back in 2021, when SOL crossed these levels, its price surged by another 82% by November, hitting its all-time high levels of $260. If Solana manages to pull off a similar performance this year as well, we could see another rally moving ahead. Some market analysts are also predicting a 170% rally for SOL, reported CNF.

As illustrated below, the Relative Strength Index (RSI) broke above the descending trendline during the previous bull market, confirming the prediction. A similar pattern now seems to be unfolding, with the RSI once again showing signs of breaking above the trendline.

Another indicator reinforcing this outlook is Solana’s active addresses, which recently reached an all-time high. A rise in active addresses indicates more participants engaging in successful transactions, reflecting increasing demand for SOL. If network activity on Solana continues to grow, SOL’s price is likely to follow suit.