As the cryptocurrency market anticipates a potential bull market, investors may consider accumulating altcoins in preparation for it.
A notable trend has emerged where altcoins are gaining significant strength, as evidenced by their recent breach of the 50-week simple moving average (SMA) barrier, indicating more positive investor sentiment towards them.
In the next phase of the market expansion, Solana (SOL) is expected to reach 10% of Ethereum (ETH), according to InvestAnswers, a prominent crypto analyst.
Assuming Ethereum reaches $8,000 in the next bull market, the analyst speculates that if Solana reaches 10% of ETH’s market cap, a threshold it has already reached in the past, that would mean a $231 price target for SOL, resulting in a return on investment (ROI) of approximately 278% from the current price of $61.02.
A few days ago, Solana’s DeFi ecosystem reached a significant milestone, with its Total Value Locked (TVL) reaching a new annual high of over $655 million. This is a significant increase of 211% since the $210.47 million TVL recorded on January 1st.
Furthermore, Solana boasts a remarkable transaction speed of tens of thousands of transactions per second (TPS), far surpassing Ethereum’s 15 TPS. This makes Solana a favorable choice for applications that require high throughput, such as decentralized exchanges (DEXs) and non-fungible token (NFT) marketplaces.
SOL reaches a new market cap
In a more optimistic scenario, InvestAnswers suggests that Solana reaching 20% of Ethereum’s market cap is not entirely unlikely.
If Solana were to reach this milestone, it would mean a market capitalization of about $192 billion, according to the expert.
Considering the potential market cap of $192 billion and token quantities, this would translate into a price of $453 for 1 SOL, resulting in an ROI of approximately 2.038% from the current price of $61.02.
InvestAnswers emphasizes that Solana has already exceeded the 10% threshold in the past.
The analyst presented a chart depicting SOL’s upside potential, where the yellow line represents 10% of ETH’s market cap, and the blue line represents Solana’s price crossing this threshold in October 2021.
Cathie Wood praises Solana’s speed and efficiency
Solana hit a new year-to-date (YTD) high a day after ARK Invest (NYSEARCA: ARKK ) CEO Cathie Wood praised the network for its efficiency and cost effectiveness.
During a Nov. 15 CNBC interview, Wood characterized the Solana Network as a significant infrastructure player within the broader blockchain ecosystem.
She expressed satisfaction with its performance in recent market conditions, stating that Solana had done a “really good job”. Drawing a parallel to the historical comparison between Bitcoin and Ethereum, she said:
“Ether was faster and cheaper than Bitcoin back in the day – that’s how we got Ether. Solana is even faster and cost efficient than Ether,”
Wood said
Wood praised Solana for its speed and efficiency compared to the Ethereum network, but predicting the project’s potential remains challenging. Solana is an emerging project, and several factors play a role when determining its future price.
Fundamentals: SOL vs ETH
Solana’s innovative Proof of History (PoH) consensus mechanism uses a verifiable record of past events to achieve network-wide consensus. This approach enables it to complete tens of thousands of transactions per second at a remarkably low fee, making the ecosystem ideal for applications that require high throughput.
On the other hand, Ethereum’s transition from Proof of Work (PoW) to Proof of Stake (PoS), known as ‘The Ethereum Merge’, was an important step in the Ethereum roadmap.
The merger lowered Ethereum’s energy consumption by 99.95%, addressing one of the longest standing problems with PoW-based blockchain systems, but it did not address the issues of only 15 TPS and high costs on the network.
Solana Labs Co-Founder Anatoly Yakovenko believes the merger has a minimal impact on improving Ethereum’s scalability based on the number of transactions and users, he said during an interview with Bloomberg Technology on September 21.
“The Ethereum Merge doesn’t really improve the scalability of the network. If you look at the number of transactions that Solana (SOL) handles daily from applications and from users, it’s more than not just Ethereum, but all Ethereum-based blockchains combined .So I think Ethereum has a long way to go with scalability.
Yakovenko said
To address the issues of scalability, Ethereum is going to implement sharding and zk summaries. This approach would greatly reduce the burden on the main chain, allowing for faster transaction processing and lower fees, but it is years away, according to the Ethereum Foundation.
Some are vocal about the Solana ecosystem, questioning its long-term sustainability and resilience, and while the developer community is growing, it is still far behind Ethereum’s well-established ecosystem of developers and projects.
Solana holds an advantage over Ethereum in terms of transaction speed and scalability, making it an attractive choice for projects with high throughput requirements. While Ethereum is working to address these limitations, it may take a few years to reach the same level of performance as Solana. This paraphrase may be the main reason why SOL will outperform ETH in the next bull market, but the project’s long-term success depends on its ability to grow and address network stability issues.
Disclaimer: The content on this website should not be considered investment advice. Investing is speculative. When you invest, your capital is at risk.
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While we love diving into the exciting world of crypto here at Uncirculars, remember that this post, and all our content, is purely for your information and exploration. Think of it as your crypto compass, pointing you in the right direction to do your own research and make informed decisions.
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And just like that rollercoaster ride in your favorite DeFi protocol, past performance isn’t a guarantee of future thrills. The value of crypto assets can be as unpredictable as a moon landing, so buckle up and do your due diligence before taking the plunge.
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