Solana Outshines Ethereum in Key Metrics—But SOL’s Rally Faces a Reckoning

Faster transactions, lower fees—Solana flaunts its advantages over Ethereum as DeFi’s ’cheap date.’ But watch the exits: traders eyeing profits could trigger a brutal sell-off. Will the ’Ethereum killer’ survive its own success, or get dumped like last cycle’s altcoin flavor?

Whale finds SOL a better option than ETH

One market whale, known for controlling notable liquidity, has significantly reduced its exposure to Ethereum, diverting funds into Solana as a preferred investment.

According to Lookonchain, the whale—Galaxy Digital—sold 65,600 ETH worth $105.48 million and accumulated 752,240 Solana worth $98.32 million over the past week, facilitated through Binance.

This significant divestment from Ethereum and near-equivalent investment in Solana suggests growing sentiment in favor of the latter. Several factors may drive this shift, including other whales selling their ETH and the asset’s recent price decline.

Source: TradingView

AMBCrypto compared the SOL/ETH daily chart to assess performance and liquidity flow. The analysis shows Solana has the upper hand.

At the time of writing, the SOL/ETH pair is aiming to breach its all-time high. It continues to rise and is less than 0.01 away from crossing that level.

When the SOL/ETH price rises, it suggests Solana is attracting more market liquidity than Ethereum and appears more valuable to investors during that period.

Solana rally driven by protocol growth

Recent interest in Solana among market participants stems from the growth of protocols on its network. The total value locked (TVL), which reflects protocols’ valuation, has continued to rise.

Source: DeFiLlama

Over the past month, Solana’s liquidity grew across all protocols except Meteora, which saw a decline.

Overall, protocols on Solana recorded an average growth of 9.34%, bringing its Total Value Locked (TVL) to $7.363 billion.

Additionally, stablecoin holdings on Solana surged to $12.976 billion, reflecting higher demand and greater network activity, further strengthening Solana’s market performance.

Notably, Solana’s trading volume on decentralized exchanges (DEXs) has skyrocketed over the past week, overtaking Ethereum, BSC, Base, and Arbitrum.

Its trading volume stood at $5.459 billion, at press time, higher than Ethereum’s, which ranks second.

Source: DeFiLlama

The volume growth confirms that traders now prefer to conduct more activity on SOL than on any other chain, placing it in a strong position.

Not a smooth path ahead

Despite Solana’s growth in TVL and trading volume, challenges remain. Trading activity has recently declined.

At the time of writing, the number of wallets holding SOL dropped from 11.11 million to 10.83 million. This significant decrease implies that many holders have sold their SOL.

Source: DeFiLlama

If the sell-off continues, it could place downward pressure on SOL’s price and limit its growth potential.