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(Kitco News) – Finding long-term blockchain projects capable of growing in value and expanding their user base is one of the biggest challenges facing cryptocurrency investors due to the volatile nature of the asset class and the rapidly advancing technology that underpins it.
One project that has managed to claw its way out of the depths of the crypto winter to see a resurgence in interest from both investors and blockchain users alike is Solana (SOL), a layer-one (L1) blockchain platform that looks to challenge Ethereum’s dominance in the realm of smart contract-supporting networks.
Data provided by TradingView shows that Solana’s road to recovery began at the start of 2023, shortly after SOL bottomed out below $8 on some exchanges after reaching a high near $300 in November 2021.
SOL/USD Chart by TradingView
One of the main reasons that Solana crashed to the degree that it did was due to a close working relationship with FTX and its former CEO Sam Bankman-Fried, who invested heavily in the project after recognizing its potential.
As the FTX saga unfolded in late 2022 and throughout 2023, Solana distanced itself from the exchange and its disgraced former CEO and got back to improving the network, expanding its capabilities, and working to establish itself as a viable competitor in the L1 space.
Since January 1, the price of SOL has surged 552% from $9.81 to a high of $63.96 on Nov. 11 amid rising institutional interest and the start of the next cryptocurrency bull market cycle. Profit-taking resulted in a pullback to $51.30 on Tuesday, but dip buyers soon arrived and pushed it back to $56.75, where it trades at the time of writing.
While most traders would be happy for any investment to increase 550% in less than a year, analysts at VanEck see even greater gains in Solana’s future and have suggested that it could reach a price of $3,211 by 2030.
“By 2030, our Solana valuation scenarios project a SOL price ranging from a bearish $9.81 to a bullish $3,211.28, anchored by varied market shares and revenue estimations across key sectors,” said Patrick Bush, senior investment analyst at VanEck, and Matthew Sigel, VanEck’s head of digital assets research.
The analysts noted that they don’t expect Solana to overtake Ethereum in terms of users, total value locked (TVL), or the number of decentralized applications hosted.
“Despite its potential, we believe Solana’s likelihood of hosting the majority of the world’s crypto transactions by 2030 is lower than Ethereum’s,” they said. “While Solana’s network and execution engine enables higher throughput and unlocks greater potential, it lacks adoption momentum by the majority of crypto users and developers.”
Based on the current number of daily active users and TVL on Solana when compared to Ethereum, the analyst said their base case sees “Solana adoption nearing 30%,” which is “a substantial jump from today’s figures, but far lower than Ethereum’s base case of 70%.”
“This comparison is apt due to the blackhole-like effect of the Ethereum ecosystem growth by swallowing and absorbing ideas while increasing its share of blockchain developers,” they said. “For context, our $11.8k price target for Ethereum was based on the ETH network achieving a 70% market share of value transmitted across open-source blockchains. Were Solana to avoid Ethereum’s event horizon and achieve Ethereum-like dominance, our bull case reveals $51.8B in revenues and a $3,211 price target in 2030.”
Solana Valuation Scenarios Overview by 2030. Source: VanEck
For the base case, the analysts included the assumption that “SOL monetizes at only 20% of ETH’s take rate and achieves less than half of ETH’s market shares due to a fundamental difference in community philosophy.”
“Even using terminal market share and take-rate assumptions well below that which we use for Ethereum, our model produces more upside in our base case for the SOL token,” they concluded. “Thus, we believe a meaningful weight for SOL in investor portfolios is justified.”
The analysts’ base case has SOL reaching $335 by 2030, an increase of 490% from its current price.
And it’s not just VanEck that sees a promising outlook for Solana.
According to cryptocurrency analyst iconicXBT, SOL will reach $500 during this crypto bull run due to Moore’s Law.
“Over time, computer chips become smaller, perform better, and cost less due to Moore’s Law,” he said. “So scaling blockchains with hardware beats software, thanks to Moore’s Law. Hardware speeds up and gets cheaper each year. Scaling issues? Moore’s Law solves them. Solana scales easily, almost infinitely, as long as hardware keeps advancing. Infrastructure matters less.”
Crypto trader Altcoin Sherpa provided a more near-term price projection, saying, “Consolidations like these are healthy; bidding $55 is a decent idea for traders. It will probably go to $75 within the next few weeks.”
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