Solana Gains Institutional Backing Despite Short-Term Ethereum Edge
A major global bank has weighed in on the ongoing Solana versus Ethereum debate, presenting a bullish case for Solana while acknowledging its short-term underperformance relative to Ethereum.
Standard Chartered, a prominent UK-based financial institution, published a research report highlighting Solana (SOL) following an interview on the Lightspeed podcast featuring Geoff Kendrick, Head of Digital Assets Research at the bank. This represents the bank’s first formal Solana analysis, signaling growing institutional interest in the blockchain.
Bank’s Positive Outlook vs SOL
Kendrick’s report expresses strong confidence in SOL’s future price potential and market position. It sets an ambitious price target of $275 by the end of 2024, revising an initial $185 target, and projects long-term potential reaching $500 by the close of 2029.
Despite these optimistic projections, the bank’s analysis predicts Ethereum (ETH) outperforming SOL in the short to medium term. This stance appears counterintuitive given the often-negative sentiment around ETH recently and the generally positive narrative surrounding Solana.
Reasons for the Outlook
Kendrick argues that many of the factors previously dragging down ETH, particularly concerning Layer 2 (L2) scaling solutions, may have already been “priced in” by the market. L2s, while enabling scalability, channel significant trading volume away from the main Ethereum network with correspondingly lower fee revenue, potentially hindering ETH’s value accrual.
This contrasts with Solana’s trajectory. Kendrick noted Solana experienced “massive multi-year lows” following the FTX collapse in 2023 but staged a remarkable comeback fueled largely by memecoin activity, driving its real economic value metric (which measures fee income from on-chain transactions) to exceed that of ETH despite having a significantly lower market capitalization (roughly a quarter of ETH’s).
However, Kendrick believes the recent lull in memecoin trading may cause Solana’s performance to lag behind Ethereum in the immediate future. He stated:
“For Solana, you came off massive multi-year lows post-FTX, had a comeback in 2023 thanks to memecoin activity, but now that memecoin trading is post-peak, Solana may underperform Ethereum in the near term.”
The market, according to Kendrick, implicitly discounts SOL relative to its activity, particularly its role in memecoin transactions, due to skepticism about memecoins’ long-term sustainability.
Market Performance
The bank’s thesis has seen support in recent trading. Over the past month, SOL’s price relative to ETH’s has dropped nearly 15%, aligning with the report’s short-term perspective.
This analysis suggests a divergence in fortunes ahead for these two major chains. While ETH faces near-term headwinds that may be resolved, Standard Chartered sees SOL gaining ground from its recent low point, though perhaps not immediately surpassing its rival.
