Solana is still a smaller project with greater appreciation potential due to its developer community, the company states.
The price of Ethereum has nearly doubled that of Solana in the last month, but this superior performance will likely be temporary, according to Adrian Fritz, head of research at Swiss asset manager 21Shares.
Although Ethereum is the most secure and decentralized smart contract platform, Solana is still a smaller project with greater appreciation potential, partly due to its developer community that is constantly seeking “better execution,” he told Decrypt on Friday (18).
“Ethereum was almost on a pedestal, looking down on other first-layer blockchains, and kind of got lazy,” said Fritz. “Solana, on the other hand, is much more focused on the commercial side.”
The price of Ethereum jumped 43% last month, reaching $3,600, as investors became less concerned about the apparent lack of involvement from the Ethereum Foundation and started to value the potential of second-layer networks more. The nonprofit foundation had already committed to addressing these issues a few months ago. Nevertheless, ETH is trading 26% below its peak during the pandemic of $4,900 in 2021.
Nearly 60% of Myriad Markets users predict that Ethereum will hit a new all-time high this year. (Myriad Markets is a product of DASTAN, the parent company of Decrypt.)
Fritz believes that the second-largest cryptocurrency by market value should indeed reach a new all-time high this year, but it will fall well short of the $10,000 mark that some optimistic analysts, like Fundstrat co-founder Tom Lee, have been projecting. Meanwhile, Solana, he says, should rise from $178 to $337 — an 89% jump — as it continues to “become a top-tier altcoin.”
The recently announced efforts by Robinhood to build a second-layer scalability network on Ethereum were an important catalyst for the asset, as they showed how traditional finance can use the Ethereum network as a global settlement layer for existing products, Fritz said. At the same time, Kraken is promoting so-called xStocks on Solana and other layer 1 blockchains.
“Solana is more centralized, but it is much faster and cheaper,” added Fritz. “So, for anything related to trading, obviously many institutions will tend to prefer Solana.”
At the same time, Fritz acknowledged that many traditional investors still do not fully understand the value of Solana as a faster and cheaper network capable of rapid growth.
“Many ask me if the network is ‘just for memecoins and speculation’,” he shared.
When activity on Solana surged in January, along with the launch of the US president Donald Trump's memecoin, Fritz said it was a “perfect stress test,” showing that the network can become a major global trading hub — potentially also for tokenized assets.
Institutional adoption of both networks is expected to grow with the approval of legislation regarding stablecoins. And the same narratives that drive the prices of Solana and Ethereum may influence companies' choices on which network to issue dollar-pegged tokens, Fritz stated.
“Within the team, this is a heated debate,” he said, referring to the other analysts at 21Shares. “The rivalry between the two blockchains is definitely ongoing.”