VanEck: How high can the SOL price go? What makes the ETH price bleak?

Author: Vince Quill, CoinTelegraph; Compiler: Tao Zhu, Golden Finance

A report from VanEck on September 25 predicted that Solana’s price could reach $330 and swell to 50% of Ethereum’s current market value, largely thanks to Solana’s superior speed and transaction processing metrics.

The report states that Solana’s throughput can reach thousands of transactions per second (TPS), 3,000% higher than Ethereum’s TPS. Solana’s number of daily active users is 1,300% higher than Ethereum, and transaction fees on the Solana network are nearly 5 million% cheaper.

The report authors believe that Solana has a clear advantage in speed and cost efficiency, which gives it an advantage over Ethereum in payments and remittances. Stablecoins in particular are considered to be the main driver of decentralized financial activity, and can use Solana's superior processing metrics to pass on cost savings to users.

Solana's transactions per second metric. Source: Solana Compass.

The authors state that retail investors are “slowly realizing” that Solana has the potential to challenge Ethereum as a smart contract platform, and are puzzled that institutional investors have yet to realize Solana’s advantages. The report speculates that one possible reason for the lag in institutional adoption could be a reluctance to switch from blue-chip assets like ETH to the younger Solana.

VanEck Analyzes Ethereum’s Dismal Price Trend

Back in September 2024, VanEck published a report outlining the factors suppressing Ethereum’s price. According to VanEck’s analysis, Ethereum’s poor price performance is primarily driven by value extraction from Ethereum’s Layer 2 network.

The explosive growth of Ethereum’s layer 2 scaling solutions follows changes made in Ethereum’s Dencun upgrade in March 2024, which significantly reduced transaction fees on the Ethereum layer 2 network.

Ethereum network fees from April to September 2024. Source: Token Terminal.

The dramatic growth of these second-layer projects and the sharp reduction in transaction fees have caused Ethereum's first-layer revenue to plummet by 99% since March 2024. However, Ethereum network fees managed to recover in late September 2024.

VanEck also specifically pointed out that users' shift to faster first-layer networks such as Solana and Sui (SUI) is another major factor suppressing Ethereum's price and transaction revenue. According to VanEck's report, Ethereum still enjoys a first-mover advantage, but this advantage is quickly disappearing.