According to VanEck's MarketVector, Solana [SOL] is significantly undervalued compared to Ethereum [ETH], but SOL could make a strong attempt to catch up.

Martin Leinweber, director of digital asset research at MarketVector, predicts that SOL could reach a market cap half that of ETH.

Solana has the potential to reach 50% of Ethereum's market cap, with predictions placing SOL at $330.”

SOL vs ETH

Leinweber believes that with Solana’s superior performance on key metrics compared to ETH, the gap between the two coins’ market capitalizations could soon be narrowed.

To put it into perspective, Solana has become extremely scalable, faster, and cheaper than ETH. Part of the report reads,

“Solana processes 3,000% more transactions than Ethereum, has 1,300% more daily active users, and its transaction fees are nearly 5 million percent cheaper.”

However, the CEO noted that despite these notable fundamentals, SOL remains significantly undervalued from a market capitalization perspective.

“While Solana has outperformed on several key metrics, its market cap is only 22% of Ethereum’s. Solana continues to outperform in transaction volume and user engagement, but its market value still lags far behind.”

At press time, ETH's market cap was $314 billion, while SOL's was $70 billion, according to data from CoinMarketCap. Assuming ETH's size remains unchanged, SOL's market cap would need to exceed $150 billion to capture 50% of ETH's market share.

The bullish outlook for SOL is also evident in the SOL/ETH ratio.

This ratio tracks the value of SOL relative to ETH and has jumped from 0.01 in early 2024 to near its all-time high of 0.05. The ratio is nearing price discovery, which could take the value of SOL to new highs.

However, according to Leinweber, more institutional investors are needed to fuel growth and enhance the value of SOL.

If there is an ETF approval for SOL, GSR – a liquidity provider and cryptocurrency exchange also shared the same bullish view in July. Although Brazil has approved an ETF for SOL, there is still uncertainty from regulation in the US.

However, GSR predicts that SOL could increase 3.4x or 8.9x in the base and optimistic scenarios, respectively, if the US approves an ETF for the asset.

During this time, the price of SOL is consolidating around $150 at the time of writing. It is up nearly 15% from the $128 support level but needs to overcome the $160 barrier to continue moving higher.