As a seasoned analyst with over two decades of experience in the crypto market, I have witnessed numerous shifts and transformations within this dynamic ecosystem. The recent surge of Solana (SOL) against Ethereum (ETH) is indeed intriguing, especially considering Solana’s relatively smaller market capitalization compared to Ethereum.
Solana (SOL) is increasingly being recognized as a formidable challenger to Ethereum (ETH), despite the fact that its market value is approximately four times less than that of the dominant smart contract platform.
On October 23rd, the trading pair between SOL and ETH reached an all-time peak of approximately 0.0692 ETH. This increase is part of a persistent bull market that has caused it to surge by over 600% since the year 2023.
Discussions are buzzing about whether Solana could surpass Ethereum’s total market value in the near term, as Solana is currently challenging Ethereum’s dominance.
The core of this optimistic view on Solana lies in its growing network activity and forthcoming enhancements, which might allow it to challenge Ethereum’s supremacy within the blockchain sector.
Solana’s DEX volume nears Ethereum
It seems that a significant factor contributing to Solana’s recent rise is the rapid increase in activity on its platform related to decentralized exchanges (DEX).
To give an example, Solana’s daily trading volume on decentralized exchanges (DEX) has been steadily increasing since August 2023, with a noticeable speed-up starting in early 2024. At times of high activity, it has even equaled or exceeded Ethereum’s DEX volume.
Ethereum consistently leads decentralized exchange (DEX) trading volume, with a typical daily trading range that outperforms the majority of its layer-1 counterparts such as Solana, on a regular basis.
Despite this, the continuous growth in Solana’s value suggests an increasing attraction among traders using its network, implying a change in user behavior favouring decentralized exchange (DEX) platforms built on Solana.
On account of its reduced transaction costs and swift transaction rates, Solana has become a popular choice for the introduction of numerous novel tokens, with a significant portion of them belonging to the meme coin classification.
As a crypto investor, I’ve noticed an intriguing surge in memecoin-related activities among Solana DEX users over the past few weeks, as indicated by the prominent bar in the graph (belonging to memecoins). This increase in activity has been quite significant across 2024.
In simple terms, the category known as “WIF & BONK sector” (colored orange) – encompassing well-known meme coin initiatives – has experienced a surge, indicating that these projects play a significant role in Solana’s heightened activity over the past period.
“ETH might actually never go to all time highs again,” analyst Jack argues, adding:
“SOL is really doing what I didn’t think was ever actually possible: replacing the network as a whole and taking all its users.”
Can SOL actually “flip” ETH?
There’s an increasing chance that Solana might overtake Ethereum in terms of technological prowess and market worth, a phenomenon known as “flippening.” This is partly because memecoins have significantly contributed to Solana’s recent expansion.
As a researcher, I’ve observed that memecoins tend to flourish in bullish market scenarios where speculative sentiment is high. However, they often experience significant corrections during bearish market phases.
Currently, for Solana to match Ethereum’s $304 billion valuation, it needs to increase its market capitalization by about 3.5 times. Yet, analysts at VanEck predict that if Solana maintains its superiority over Ethereum in terms of daily active users and transaction volume, it could potentially attain 50% of ETH’s value within the upcoming years.
According to experts at Bitfinex, for Solana to thrive in the long run, it must broaden its user base beyond speculators. To ensure lasting growth, Solana should appeal to decentralized finance enthusiasts, conventional financial entities, and businesses.
It was observed that the Firedancer update introduced in 2025, designed to increase Solana’s transaction processing speed to a potential 1 million transactions per second, may make its network more attractive for bigger investors and financial institutions.
Excerpts from their Bitfinex report:
“If Solana can capitalise on this [Firedancer] growth, the ‘flippening,’ where Solana surpasses Ethereum in market cap, could become more than just speculative theory.”
Technicals hint at a big pullback in 2025
As a crypto investor, I’ve been closely watching the price action between Solana and Ethereum, and it appears that Solana’s technical indicators are currently pointing towards an overvalued position relative to Ethereum. This suggests that there could be a potential correction in the near future. It’s always important to keep an eye on market trends and make informed decisions based on the data at hand.
Three signs suggest a possible downturn:
In simpler terms, the Relative Strength Index (RSI) for the weekly SOL/ETH exchange rate is approaching 70, which typically suggests that the market is becoming overbought. Additionally, while the price of SOL relative to ETH has been rising, there’s a noticeable disparity between this increase and the decreasing RSI, suggesting a slowdown in the price momentum.
Finally, the price of Solana is gradually ascending within a rising wedge, which is a bearish formation marked by converging support and resistance lines. If this pattern breaks down, it could trigger a steep drop, possibly aiming for the lower Fibonacci retracement levels.
Should a disruption happen, it’s possible that the value of SOL/ETH might dip to around 0.0357 to 0.0436 ETH by the beginning of 2025. This predicted drop represents a potential decrease of about 40-50% from its current value.
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2024-10-24 17:15