Solana Will Underperform Ethereum, Standard Chartered Warns | US Crypto News

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Welcome to the US Crypto News Morning Briefing—your essential rundown of the most important developments in crypto for the day ahead.

Grab a coffee for insights into what experts and TradFi say about the longstanding Solana (SOL) versus Ethereum (ETH) debate. According to Standard Chartered, Solana could underperform Ethereum.

Crypto News of the Day: Standard Chartered Predicts Solana Will Lag Behind Ethereum

The Solana versus Ethereum debate goes back years, with users presenting the two blockchains as inadvertent rivals. However, according to Standard Chartered’s Head of Digital Assets Research, Geoff Kendrick, Solana could underperform Ethereum.

The analyst cites a projected decline in meme coin-driven activity, which could leave Solana with a usage gap.

“Usage gap may exist for a period, such that SOL underperforms ETH, which is the basis of our forecasts for SOL,” Kendrick told BeInCrypto.

The Standard Chartered executive acknowledged that Solana has proven its technical strength. Specifically, it has handled high volumes of fast, low-cost transactions during the meme coin trading surge.

However, given meme coins’ seasonality, Geoff Kendrick cautions that this dominance is a double-edged sword.

“Solana’s dominance of meme coin trading is a double-edged sword,” Kendrick added.

Indeed, meme coins have made up most of Solana’s on-chain activity, potentially overshadowing long-term use cases.

With the meme coin boom likely past its peak, a usage gap could emerge before other high-throughput applications, such as financial platforms or consumer-facing apps, such as social media, take hold.

Standard Chartered notes that these emerging sectors on Solana have yet to scale meaningfully, raising concerns about short-term underutilization.

As a result, markets are beginning to discount Solana’s near-future earnings from the meme coin sub-sector.

To put this in perspective, traders reduced exposure to Solana in February due to uncertainty around its meme coin scene and major protocols.

In contrast, Ethereum continues to benefit from a broader base of use cases and institutional alignment, giving it a potential edge.

Kendrick’s assertions align with recent remarks from IntoTheBlock analysts, who said Solana still has a long way to go before it can surpass Ethereum.

“While‬‭ Solana‬‭ may‬‭ continue‬‭ to‬‭ grow‬‭ and‬‭ potentially‬‭ challenge‬‭ Ethereum‬‭ in‬‭ specific‬‭ niches,‬‭ overcoming‬‭ Ethereum’s‬‭ entrenched‬‭ position‬‭ as‬‭ the‬‭ dominant‬‭ platform‬‭ in‬‭ the‬‭ immediate‬‭ future‬‭ is‬‭ still‬‭ unlikely,‬‭ though‬‭ the‬‭ competitive‬‭ landscape‬‭ is‬‭ dynamic and evolving,” Juan Pellicer, Senior Research Analyst at IntoTheBlock said in a statement to BeInCrypto.

Despite Solana’s technical achievements, the bank argues that sustainable value must come from diversified application growth, something Ethereum already sees.

BeInCrypto recently reported that Ethereum flipped Solana in decentralized exchange (DEX) trading volume. This came after Solana’s DEX activity declined due to reduced trading on platforms like Raydium (RAY) and meme coin launchpad Pump.fun.

Until Solana’s next wave of real-world applications gains traction, its price performance may lag behind Ethereum’s.

Ethereum (ETH) and Solana (SOL) Price Performances. Source: TradingView

Negative Funding Rate Signals Short Pressure for Solana

Elsewhere, blockchain analytics firm Glassnode notes that Solana is the only top 10 cryptocurrency, excluding stablecoins, with a negative funding rate, currently at -0.0002%.

This suggests that traders are paying to maintain short positions, potentially signaling early bearish sentiment in the market. The data indicates short-side pressure may be building for SOL, the popular layer-1 blockchain known for its high-speed transactions.

However, this negative funding rate could be a contrarian signal. BeInCrypto reported that traders have been accumulating millions worth of SOL, hinting that the Solana price may be primed for a breakout.

Further, institutional investors accumulated Solana in May amid a bullish takeover among SOL traders, signaling long-term confidence.

Notably, negative funding rates often lead to short squeezes, where rising prices force short sellers to cover, potentially fueling a rally.

As investors watch the Solana versus Ethereum duel, traders and investors are watching Bitcoin (BTC) for broader market cues. A recent US Crypto News publication indicated that Lawrence Lepard, an advocate for sound money principles, said BTC is the “most asymmetric bet” he’s seen in 40+ years.