A Standard Chartered analyst said Solana could quadruple by 2025. This puts the property at a market value of $264 billion.
Solana's SOL token has rallied 900% since the collapse of crypto exchange FTX in 2022.
However, it is expected to further quadruple by the end of 2025, says Geoff Kendrick, global head of digital assets research at Standard Chartered Bank. News.
Based on SOL's current price of around $140, that puts it at $560 with a total market value of $264 billion.
Solana is currently trading around $140.
But Kendrick's lofty goal for Solana hinges on three big factors in the coming months.
US elections
First, the 2024 general election in the US. Standard Chartered said its Solana price target would be more justified if former President Donald Trump returned to the White House for a second term.
“The Trump administration is more supportive of the broader digital assets ecosystem than the Harris administration,” Kendrick said in a recent report. “Even the introduction of a SOL ETF is likely to be a Trump presidency.”
Some investors have speculated that the Spot Solana exchange-traded fund could be next after the US Securities and Exchange Commission approved spot Ethereum ETFs earlier this year.
Kendrick isn't bearish on SOL under a potential Kamala Harris administration, though. If the vice president wins in November, he predicts SOL will double in value.
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New Solana Tech
Another variable is whether Solana can successfully increase the number of transactions it can handle.
FireDancer, a new validator client being developed by Jump Crypto, is critical.
It aims to increase Solana's theoretical throughput from 50,000 transactions per second to 600,000.
“Current price metrics demonstrate, in our view, that Solana is only sustainable if it can achieve 100-400x throughput growth,” Standard Chartered said. “This requires the firedancer to be active.”
Solana spins around 3,200 Transactions per second according to Data Dashboard Solana Beach.
However, there are many dangers.
Building and launching FireDancer is a huge technical undertaking. A lot can go wrong.
And other new blockchains like Sui and Aptos already claim to offer higher transaction throughput than Solana.
More users
Building the infrastructure for higher throughput is only half the battle – Solana also needs to employ more people.
Standard Chartered said Solana needed to establish dominance in finance, which it could do through its recent Visa partnership.
It will also increase usage through consumer apps such as decentralized social media platforms and decentralized physical infrastructure networks, or DePINs.
Core to the bank's outlook is the ratio of Solana's market value to the fees it generates, a method of weighing blockchain's valuation against its utility.
Solana's market value is 250 times the fee it generates. Ethereum, the largest smart contract network, has a multiplier of 121.
According to Kendrick, this means Solana is “very valuable” against Ethereum based on its market value to fees ratio.
In other words, Solana will be overvalued or Ethereum will be undervalued.
But if Solana is indeed overvalued, this is evidence that traders expect SOL to be much higher in the future, the report said.
There is Tim Craig News' Edinburgh-based DeFi correspondent. Reach out with tips at [email protected].
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