Solana (SOL) has seen a significant decline in its performance compared to the two leading digital currencies, Bitcoin (BTC) and Ethereum (ETH). This comes after a period of relative superiority during the last quarter of 2024. This was revealed by the Glassnode platform, which specializes in analyzing blockchain data. The platform explained that the slowdown in capital flows to Solana is the main reason behind this decline.
Glassnode noted in a tweet that Solana outperformed both Ethereum and Bitcoin for most of Q4 2024 in terms of price performance. However, since early December, Ethereum has started to take the lead, outperforming both.
Current figures show that Bitcoin is up about 18% over the past month, Ethereum is up 28%, while Solana is up just 3%. This discrepancy clearly indicates that Solana, once the market leader, is underperforming.
Capital Flows Secret to Solana's Decline
According to Glassnode, this shift in market dynamics is due to changes in capital flows that these cryptocurrencies have recently experienced. To estimate these flows, the company used the Realized Cap indicator.
Realized Cap in cryptocurrency is an alternative measure of market cap that is based on the last price paid for each unit of a coin rather than the current market price. Unlike traditional market cap, which is calculated by multiplying the total number of coins in circulation by the current market price, Realized Cap takes into account when each coin last moved and what its price was at that time.
This price can be considered as the basis for the cost of buying one currency, and by adding these costs for all currencies in circulation, we get a value that represents the total amounts invested by traders to buy and obtain their currencies.
By tracking changes in realized value, we can see how much money has entered or left the asset over time.
The chart shows that the 7-day Realized Cap change was at a notable positive level between September and early December. Bitcoin and Ethereum also saw capital inflows during this period, but Solana was growing at a much faster pace.
However, this month saw a reversal in this trend, with both Bitcoin and Ethereum outperforming Solana. The previous higher capital inflows are likely the drivers behind Solana’s outperformance. With that stalled, it makes sense for major assets to take the lead.
