A recent report highlighted three key reasons why Solana (SOL) is struggling to keep pace with Ethereum (ETH), at least from a market performance perspective beyond daily price movements.
Market expert Dominic Basulto of The Motley Fool pointed to factors he believes have shaped investor sentiment and influenced Solana’s momentum in key areas.
The Meme Coin hangover
One of the most important drivers, Basulto saidis how many investors still associate Solana with the meme coin craze of 2024. During that period, Solana became the destination of choice for people minting and trading meme coins, and the conversation often brought up the idea of a “meme coin super cycle.”
At its peak, the meme coin market was valued at around $150 billion. Today, Basulto says the segment is worth less than $40 billion, and many individual meme coins are still well below their 2024 peak.
For some investors, the expert says the connection between Solana and that hype cycle has never fully faded, which may have contributed to continued hesitation toward the network.
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A second explanation concerns Solana’s attempt to… mobile-first crypto ecosystem– and the belief that it never took off as his early ambitions suggested.
In June 2022, Solana announced the launch of a mobile device called Saga, along with a broader mobile strategy. Basulto noted that the Saga was positioned as a breakthrough, but at $999 it struggled to compete with mainstream smartphones.
While Solana later introduced a cheaper alternative, the bigger idea of creating a mobile crypto environment didn’t seem to resonate with investors or consumers at the scale needed to create a sustainable advantage.
Solana ETF Momentum falls short
The third reason Basulto put forward is about Solana exchange traded funds (ETFs) and the expectation that they would attract a meaningful wave of institutional interest.
He noted that there are now eight spot Solana ETFs trading in the US, but they have not achieved the momentum seen in the spot Bitcoin (BTC) ETFs, which launched in January 2024.
The rollout of spot Solana ETFs was widely seen as a potential catalyst, something that could bring more institutional capital into the space.
Instead, Basulto said Solana ETF’s momentum has been limited. He estimated that total assets under management (AUM) for spot Solana ETFs is currently around $1.1 billion, which is in stark contrast to spot Bitcoin ETFs which reportedly raked in $100 billion in less than 12 months.
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Yet Basulto’s overall conclusion was not pessimistic. He argued that Solana could still be a stronger long-term investment compared to Ethereum, based on what he described as a visible shift in Solana’s direction.
According to him, Solana is turning away from meme coins and moving towards stablecoins, while also strengthening its presence in the decentralized finance (DeFi) sector.
Basulto added that Solana remains faster and cheaper than Ethereum, and that these benefits could continue to attract developers and users to Solana over time.
At the time of writing, SOL was trading around $86, with losses recorded across all timeframes, representing a 51% decline year-to-date (YTD). Meanwhile, ETH traded just above $2,100, also recording losses across all time frames and a 20% YTD drawdown.
Featured image created with OpenArt, chart from TradingView.com