Key Points
Solana’s native token has shown significant strength against Ethereum. Despite its market capitalization being almost a third of Ethereum’s, it has managed a 70% rally in 2024.
Solana’s Strong Performance
The debate about Solana potentially overtaking Ethereum is supported by several factors. These include bullish on-chain metrics, dominance in DEX metrics, volume, and protocol revenue. On Monday, November 18, Solana hit an all-time high against Ethereum.
In November 2024, Solana’s protocol fees were nearly twice that of Ethereum’s. The available data indicates that Solana collected $343.96 million in protocol fees, compared to Ethereum’s $178.65 million. This suggests higher revenue for Solana.
Another factor supporting Solana’s potential to overtake Ethereum is its transaction volume on decentralized exchange platforms (DEXes). In November, Solana’s DEX volume was nearly twice that of Ethereum’s. High DEX volume indicates higher utility and adoption of one chain over another.
However, Ethereum dominates in circulating stablecoin supply and the total value of cryptocurrencies (TVL) locked on the chain. Solana lags behind in these metrics but could potentially overtake Ethereum in the long term with continued adoption and demand.
To overcome these challenges, Solana’s ecosystem is adding new stablecoins. This could push its circulating stablecoin supply and TVL metric higher. For example, Sky, a decentralized finance lending and borrowing protocol, recently deployed its USDS stablecoin on Solana.
Solana-based meme coins have crossed $22 billion in market capitalization. The rise of Solana against Ethereum has likely fueled gains in its ecosystem tokens, positively impacting crypto portfolios holding these tokens.
On the other hand, Ethereum’s Layer 2 token ecosystem and Layer 3 projects are struggling to gain traction. Crypto traders holding these tokens may observe unrealized losses on their portfolio as Ethereum faces competition from alternatives like Solana.
When traded against Ethereum, Solana hit a record-high of 0.079770 on Monday, November 18. Technical indicators suggest potential for further gains and a re-test of this all-time high.
The SOL/USDT pair is trading at $238.56 on Wednesday, November 20, 8.95% below its all-time high. Technical indicators suggest further gains are likely, and Solana could return to its record high.
Solana’s correlation coefficient with Bitcoin is 0.98 per info from Macroaxis.com. Therefore, Solana’s price trend is expected to follow Bitcoin closely. Traders should consider this before adding to their positions in both assets.
