Solana Overvalued Compared to Ethereum, But Could Outperform If Trump Wins: Standard Chartered

According to a report from Standard Chartered Bank, Solana (SOL) appears overvalued compared to Ethereum (ETH) based on various metrics. However, the relative performance of these tokens, as well as Bitcoin (BTC), may heavily depend on the outcome of the upcoming U.S. presidential election.

Led by Geoff Kendrick, Standard Chartered's global head of digital assets research, the analysts predict that a Donald Trump presidency could lead to more favorable crypto regulations and a higher chance of approving spot-based Solana ETFs. In contrast, a Kamala Harris-led administration could dampen the performance of smaller and riskier cryptocurrencies like Solana.

Despite this, the analysts remain optimistic about crypto overall, regardless of the election's outcome. They forecast SOL to be the top performer under a Trump administration, followed by ETH and BTC. Conversely, if Harris wins, BTC is expected to lead, with ETH and SOL trailing.

Under Harris, Ethereum could rally to $7,000 by the end of 2025, while it could reach $10,000 under Trump, according to the report. Bitcoin is projected to surge to $200,000 in the same period, no matter who wins the election.

Solana Overvalued vs. ETH

While Ethereum has long been the dominant layer-1 blockchain for applications, Solana’s growing network activity and SOL’s rapid price increase have led some in the crypto space to speculate about a potential shift in leadership.

According to Standard Chartered, several valuation metrics suggest Solana is overvalued when compared to Ethereum. SOL's market capitalization-to-network fee revenue ratio is 250, more than double ETH's 121. Additionally, SOL’s supply grows at an annual rate of 5.5%, compared to Ethereum's 0.5%, which means Solana’s staking yield is 1%, compared to Ethereum’s 2.3%.

Moreover, while 38% of blockchain developers work within the Ethereum ecosystem, Solana claims only 9% of the developer market share. Standard Chartered analysts noted that Solana's current valuation assumes very strong growth, with the market anticipating a 100-400x increase in throughput.

For Solana to maintain its valuation, the network will need to dominate multiple sectors such as decentralized finance (DeFi), consumer services, and decentralized physical infrastructure networks (DePIN). Additionally, the activation of the Firedancer client, which is expected to improve network efficiency, will be crucial for its future success.