Solana and Ethereum have competed for dominance throughout Q4 2024. Ethereum secured over $850 million in institutional capital inflow to ETFs, while Solana attracted over $300 million in cross-chain inflows within the past week.
Market experts and reports suggest Solana is poised to beat Ethereum and replace ETH as the largest altcoin in crypto. 2025 is therefore a pivotal year for Ether and Solana, the latter’s competitive edge lies in DEX metrics and its growth potential alongside rising capital inflows.
Solana’s win could bring changes to portfolios and Ethereum beta plays could suffer a correction in the event SOL dethrones ETH. This deep-dive can prepare traders effectively for the changing dynamics in crypto.
Solana vs. Ethereum
Solana outpaced competitor Ether in several key areas in 2024. After outperforming Ethereum in October and November 2024, Solana is neck and neck with Ether in December. Data from TheBlock shows that SOL and ETH are competing in app revenue, app fees, and decentralized exchange volume.
In terms of app fees, Ethereum garnered $311.1 million this month, against Solana’s $322.8 million.
Solana outperformed Ethereum in App revenue in October and November 2024, in December Ethereum clocked $93.56 million and Solana dominated with $140.95 million.
In terms of DEX volume, Solana leads with $67.43 billion, Ethereum lags at $52.37 billion, per TheBlock data. Solana based DEXes have observed a large volume of token launches and trades in Q4 2024, this is likely the catalyst driving DEX volume on the SOL chain.
Solana’s growing dominance in DeFi is evident from the comparison between the two chains. SOL looks poised to outperform Ethereum in DEX metrics in December as well, extending its streak from the last two months.
These catalysts could bolster Solana adoption
Solana ETF approval by the U.S. Securities and exchange commission could legitimize SOL and bolster the altcoin’s adoption among crypto market participants. Ethereum’s ETF adoption supported capital inflows to the altcoin and in the last week alone, ETH garnered over $850 million from institutional investors.
Solana gained over $300 million from different blockchains, of which $200 million was transferred from Ethereum, just last week. Solana-based DEXes are closing the gap with centralized exchanges in the crypto ecosystem. Advancement and scalability is slowly bolstering the utility of DEXes and driving active user count higher every week.
Anmol Singh, co-founder of Zeta Markets told crypto.news in an exclusive interview:
“Solana is on track to cement itself as the dominant player in DeFi and on-chain applications by 2025. With its low fees, high speed, and growing ecosystem, it’s positioned perfectly to absorb the capital flowing into DeFi. The breakthroughs in DEX performance and scalability will continue to push centralized exchanges out of the way, shifting the focus to decentralized platforms that are faster, fairer, and more transparent.”
Crypto market participants are looking forward to the Petra upgrade which is expected to vastly improve Ethereum’s speed and performance. Meanwhile, Solana’s Frankendancer and Firedancer upgrades promise to transform the SOL network, boosting accessibility, uptime, and overall performance.
Technical analysis targets for Solana and Ethereum
Ethereum is trading close to its 2024 peak of $4,107. The altcoin hovers around the psychologically important $4,000 level on Tuesday. Ethereum’s previous all-time high is $4,878 and the cycle target is $5,185, the 161.80% Fibonacci retracement level of the rally from the November 4 low of $2,361 to the 2024 top of $4,107.
Relative strength index reads 61, below the 70 level, that typically generates a sell-signal. Moving average convergence divergence signals an underlying bearish momentum in Ethereum price trend.
Ethereum could find support in the zone between $3,252 and $3,680, as seen in the daily price chart, in the event of a correction.
Solana’s daily chart shows potential for gains in SOL. Solana trades at $219 on Tuesday. The Ethereum competitor is currently consolidating, however a daily candlestick close above $231.62 could mark the end of the sideways trend.
Solana could face resistance at the $264.59 peak and the cycle target is $359.81, the 161.80% Fibonacci retracement level of Solana’s price rally.
If Solana is faced with a correction, traders could mark $221.06 to $233.22 as the support zone for the altcoin.
Solana cools down after Pump.fun pulls the plug on livestreams
While DEX’s rising popularity and higher DeFi token activity positioned Solana as a top competitor to Ethereum, launchpad Pump.fun’s decision to end livestreams may have slowed down SOL’s progress.
The cooldown in terms of on-chain activity and network revenue, experienced by SOL is likely the result of Pump.fun’s recent steps. The SOL network generated an average of nearly $5 million in fees per day, nearly 50% lower than the network’s daily average fees generated during the third week of November, where it noted the highest-ever single-day revenue at $13.3 million.
It remains to be seen whether Solana will recover from the slowdown, an ETF approval or higher DEX adoption could emerge as drivers of SOL adoption this cycle.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
