The cryptocurrency Solana (SOL) has gained popularity in recent years, mainly due to its fast and inexpensive blockchain technology. But a recently published analysis by the renowned Standard Chartered Bank is now making headlines: If Donald Trump becomes US president again, the price of Solana could increase fivefold by the end of the year.

How does this forecast come about, and what are the driving factors behind a possible price increase?

Trump’s influence on the crypto markets

Donald Trump has made it clear during his presidency and also in the current election campaign that he has a rather positive attitude towards Bitcoin and other cryptocurrencies. Trump, who once said that the US dollar could lose strength if the US does not embrace digital currencies, is seen by many in the crypto community as a potential catalyst for a crypto boom.

That is mainly because he already announced during the election campaign that he would reduce regulatory pressure on the crypto industry and steer the US more towards blockchain technology and cryptocurrencies.

A Trump victory in the presidential election could therefore create a positive environment for cryptocurrencies, giving the markets a new boost. Solana in particular, which is increasingly positioning itself as a strong alternative to Ethereum, could benefit from this.

Why Solana?

Solana is often referred to as the “Ethereum killer” because it offers a blockchain that is faster and more scalable than Ethereum. The network can process up to 65,000 transactions per second, while transaction costs are minimal compared to Ethereum. This makes Solana attractive to many developers and DeFi projects. In addition, the Solana ecosystem is growing in popularity among NFT projects, which is giving the price of SOL an additional boost.

However, according to Standard Chartered’s analysis, there is another reason why Solana could benefit particularly strongly: its connection to institutional investors. If institutional investors such as hedge funds and asset managers push more into the crypto market due to looser regulation under Trump, Solana could become one of the preferred investments due to its technological advantages and its already existing infrastructure in the financial sector.

An environment for growth

In addition to the political landscape, economic factors could also play a role. Standard Chartered predicts that under a second Trump presidency, the US key interest rate could be cut further. Lower interest rates make cryptocurrencies and other speculative investments more attractive because they offer higher returns than traditional investments such as bonds. This could motivate institutional and private investors to shift their capital into cryptocurrencies such as Solana.

The demand for innovative blockchain solutions will also continue to grow as more and more companies and developers look for fast, secure and cost-effective platforms for decentralized applications (dApps). Solana is able to meet this demand and could thus consolidate its position in the market.

Do not ignore risks

Of course, this forecast is not without risks. The crypto market is known for its volatility, and political developments are difficult to predict. While a Trump victory could certainly provide positive momentum for Solana and other cryptocurrencies, it remains unclear how other political actors – such as the US Congress – will behave. Regulatory uncertainties and potential market manipulation could also slow down the expected upward trend.

Conclusion: Solana in the fast lane?

The prediction that Solana price could quintuple by the end of 2025 is quite optimistic. It is based on a combination of technological advantages, growing adoption, and a potentially crypto-friendly political environment under Trump. Investors who believe in Solana’s potential could make significant gains in the next few years – provided the political and economic environment develops as expected.

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With the cryptocurrency trade coming into the mainstream this previous 12 months, its underlying points have additionally come to the limelight alongside it.

Among the many most steadily cited is the excessive vitality consumed by the oldest and hottest blockchains together with Bitcoin and Ethereum, resulting from their use of the Proof of Work consensus mechanism.

Sustainability or safety?

These points had been particularly exasperated this 12 months when the rise of DeFi and NFT sectors led to skyrocketing utilization of Ethereum. In actual fact, it introduced visitors that the community was maybe not ready to deal with.

In a current weblog publish, the platform famous,

“Ethereum’s present vitality expenditure is just too excessive and unsustainable. Resolving vitality expenditure issues with out sacrificing safety and decentralization is a big technical problem.”

Amidst extreme backlash, Ethereum is now pushing in the direction of a greener ecosystem, with its shift to the Proof of Stake consensus mechanism which makes use of considerably much less vitality in comparison with PoW.

Because it eradicates the necessity for miners and as a substitute replaces them with validators that stake their very own ETH as a type of belief, the necessity for prime computational energy turns into meaningless.

A number of rival blockchains together with Polkadot, Cardano, and Avanalche have already employed this mechanism and are thus recording a lot decrease transaction charges and time.

Ethereum’s PoS-based Beacon Chain has already been operating for the reason that finish of 2020 and the community is meant to completely undertake the identical by the second quarter of 2022. Within the meantime, the chain has supplied Ethereum with insights on how scalable and energy-efficient the community will likely be post-Merge.

PoW to PoS is the best way forward

Moreover, in accordance with the aforementioned weblog publish, the merge to PoS might end in a 99.95% discount in complete vitality use, and that the mechanism will likely be 2000x extra environment friendly when in comparison with PoW.

“The vitality expenditure of Ethereum will likely be roughly equal to the price of operating a house laptop for every node on the community.”

Compared, an ETH transaction in PoW is equal to the facility consumption of a median U.S family over 7.44 days, in accordance with a report by Digiconomist.

The publish additionally advised a “practical estimate” for post-Merge sharded Ethereum transactions with Rollups, which got here out to be 25,000-100,000 transactions per second (tps). Because of this the community would take round 4 seconds to finish 100,000 transactions, which might use about 0.667 kWh of vitality.

“That is ~0.4% of the vitality utilized by Visa for a similar variety of transactions, or a discount in vitality expenditure by an element of ~225 in comparison with Ethereum’s present proof-of-work community.”

Curiously, a single ETH transaction at the moment makes use of as a lot vitality as 100,000 VISA transactions.

Whereas it’s not possible to estimate what the long run holds for the community post-Merge by way of its ESG targets, the Beacon Chain has stirred up hassle in a unique lane.

A Twitter consumer just lately highlighted that the chain’s contract is the only largest Ethereum contract containing 8,641,954 Ether, value over $34 billion at press time. This could reportedly not be “despatched or spent.”

BREAKING: 8,641,954 ETH ($32 billion) trapped in single largest Ethereum contract and unable to be despatched or spent. Would require laborious fork that hasn’t been written or specified but. Timing and phrases of laborious fork nonetheless unknown.https://t.co/xcXPwbS93v

— Tomer Strolight | Agitating for Bitcoin Artwork (@TomerStrolight) December 14, 2021

Even because the community would possibly require an unspecified laborious fork to rescue the funds, the massive quantity of ETH that has already been staked does point out excessive demand and belief for the ETH 2.0 merge.