Solana Struggles Against Bitcoin & Ethereum Why?

Solana (SOL) has recently been lagging behind Bitcoin (BTC) and Ethereum (ETH).

Solana Realized Cap Growth Has Slowed Down Recently

Solana has stacked up against the two largest coins in the sector. “Looking at price performance, SOL outpaced both ETH and BTC for most of Q4 2024,” notes the analytics firm. “However, since early December, ETH has taken the lead, outperforming the other two assets.”

As it stands right now, Bitcoin is up around 18% over the past month, Ethereum 28%, and Solana 3%. Thus, SOL has clearly fallen off after being the market leader just earlier.

What could be behind this shift in the market? The answer to the question could lie in the capital flows that these cryptocurrencies have recently been observing.

The “Realized Cap” refers to an on-chain capitalization model that calculates the total value of any digital asset by assuming that the ‘real’ value of any token in circulation is the price at which it was last transacted on the blockchain.

Since the last transfer for any coin is likely to represent the last point at which it changed hands, the price at its time could be considered its cost basis. Thus, the Realized Cap is a sum of the cost basis of all coins in the circulating supply or, more simply, a measure of the total amount of capital that the investors as a whole have put into the cryptocurrency.

In this view, changes in the Realized Cap essentially reflect the amount of capital that’s exiting out of or entering into the asset. Below is the chart for the 7-day change in the indicator shared by the analytics firm, which showcases these outflows/inflows happening for Solana and others.