On-chain analytics firm Glassnode has revealed the reasons why Solana (SOL) has recently lagged behind Bitcoin (BTC) and Ethereum (ETH).
The growth in market value realized by Solana has recently slowed down
A new post by Glassnode on X discusses how Solana's recent performance compares to the two largest tokens in the industry. The analytics firm noted: "In terms of price performance, SOL has outperformed ETH and BTC for most of Q4 2024." "However, since early December, ETH has maintained its lead, performing better than the other two assets."
Currently, Bitcoin has risen about 18% over the past month, Ethereum has risen 28%, and Solana has risen 3%. Therefore, SOL has clearly fallen after previously being a market leader.
What is the reason for this shift in the market? The answer to the question may lie in the capital flows observed in these cryptocurrencies recently.
To estimate the capital flow of assets, Glassnode uses the actual market value metric. "Actual market value" refers to an on-chain capitalization model that calculates the total value of any digital asset by assuming that the 'actual' value of any token in circulation is the price of its last transaction on the blockchain.
Since the last transfer of any token likely represents the last time it changed hands, the price at that time can be viewed as its cost basis. Therefore, the actual market value is the sum of the cost basis of all tokens in circulation supply, or more simply put, a measure of the total amount of capital investors have put into cryptocurrency.
From this perspective, the change in actual market value essentially reflects the amount of capital exiting or entering the asset. Below is the chart shared by the analytics firm showing the 7-day change of this metric, illustrating the outflows/inflows of Solana and other companies.
From the chart, it can be seen that the 7-day change in realized market value was significantly positive from September to early December. During this time, Bitcoin and Ethereum also saw capital inflows, but SOL's growth rate was significantly faster.
However, this month, the industry has seen a reversal, with both Bitcoin and Ethereum surpassing Solana. The earlier higher capital inflows may have been a driving factor for SOL's strong performance, so it is reasonable that the top two assets have taken over as these capitals have disappeared.
SOL Price
Despite the recent surge in Bitcoin and Ethereum over the past few days, Solana has been in a consolidation phase, with its price still trading around $221.
