A recent report by Standard Chartered Bank has highlighted some concerning valuation metrics for Solana (SOL) compared to Ethereum (ETH). However, the bank’s analysts believe that the outcome of the upcoming U.S. presidential election could significantly impact the relative performance of these two tokens, as well as bitcoin (BTC).
The Impact of the Presidential Election on Crypto Valuations
According to Geoff Kendrick, global head of digital assets research at Standard Chartered Bank, the team expects more accommodating crypto regulations and higher chances of approval for spot-based solana ETFs under a Donald Trump presidency. On the other hand, a Kamala Harris-led administration could weigh heavily on smaller, riskier cryptocurrencies.
Solana’s Dominance in Blockchain Applications
Ethereum has been the dominant layer-1 network for blockchain applications, but Solana’s increasing blockchain activity and SOL’s rapid price surge have convinced many crypto observers that a change in leadership is due. However, Standard Chartered analysts argue that several metrics indicate SOL is overvalued compared to ETH.
Key Valuation Metrics
- Solana’s ratio of market capitalization versus network fee revenues is 250, more than double Ethereum’s 121.
- Solana’s supply grows around 5.5% annually, while Ethereum’s token inflation rate stands around 0.5% a year.
- Higher inflation means that SOL’s real staking yield is 1%, compared to ETH’s 2.3%.
- Only 38% of all established developers in the blockchain industry work on the Ethereum ecosystem, with Solana claiming a 9% share.
SOL Valuation Metrics Suggest Bright Growth Future
"SOL valuation metrics suggest the market is pricing in a very bright growth future for Solana," said Kendrick. "With a 100-400x increase in throughput expected, such valuations would be easier to justify under a Trump administration than a Harris one." In order to uphold its current valuation, Solana will need to claim dominance in multiple crypto sectors with high traffic, including finance, consumer, and decentralized physical infrastructure (DePIN), as well as activate the Firedancer client that allows increased efficiency.
Bitcoin’s Potential Surge
Regardless of who wins the November election, Standard Chartered analysts remain bullish on crypto. They forecast ETH to rally to $7,000 by the end of 2025 under Harris and $10,000 under Trump. Bitcoin could surge to $200,000 during the same period.
Trump Presidency Favors SOL
Under a Trump presidency, the bank’s analysts expect Solana to be the top performer of the three, followed by ether and then bitcoin (BTC). However, this outcome is based on the assumption that Trump will introduce more accommodating crypto regulations.
Potential ETF Approval
A spot-based solana ETF approval under a Trump administration could significantly boost SOL’s performance. This would provide institutional investors with easier access to Solana, potentially leading to increased demand and prices.
Harris Presidency Weighs on Smaller Cryptocurrencies
On the other hand, a Kamala Harris-led administration could weigh heavily on smaller, riskier cryptocurrencies like Solana. The bank’s analysts expect bitcoin to lead ETH and SOL under a Harris presidency.
Investors Must Consider Multiple Scenarios
In light of these findings, investors must consider multiple scenarios when evaluating their crypto portfolios. Standard Chartered analysts recommend staying bullish on crypto regardless of who wins the election, as both outcomes offer potential for growth.
Conclusion
The outcome of the U.S. presidential election could significantly impact the relative performance of Solana (SOL), Ethereum (ETH), and bitcoin (BTC). While Standard Chartered analysts expect SOL to be overvalued compared to ETH based on several metrics, a Trump presidency might change everything. Investors must consider multiple scenarios when evaluating their crypto portfolios.
References
- Jump’s ‘Frankendancer’ Validator Client Is Live on Solana Mainnet
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Key Takeaways:
- Solana’s valuation metrics suggest a bright growth future for the token.
- A Trump presidency might favor SOL’s performance, while a Harris administration could weigh heavily on smaller cryptocurrencies.
- Bitcoin is expected to surge under both election outcomes.
- Investors must consider multiple scenarios when evaluating their crypto portfolios.