Can Solana flip Ethereum? What this means for your crypto portfolio

Solana (SOL) is up 70% against Ethereum (ETH) in 2024. The smart contract blockchain’s native token has emerged as a strong competitor to Ether, even though its market cap is almost a third of Ethereum.

The ongoing debate for Solana (SOL) to outperform Ethereum (ETH) is supported by on-chain metrics, SOL’s dominance in DEX metrics, volume, and protocol revenue. Solana reached a new all-time high against Ethereum on Monday, November 18, as SOL/ETH rose to 0.07977.

On-chain metrics show Solana could surpass Ethereum

Solana’s protocol fees, which are a small percentage of transaction value collected to maintain and facilitate trading on the blockchain, are nearly double Ethereum’s in November 2024.

Although the monthly date is missing, available data shows that Solana has collected $343.96 million in protocol fees as of Tuesday, November 19, compared to Ethereum’s $178.65. For a blockchain, protocol fees are added to the project’s revenue after liquidity providers are paid.

Therefore, the measurement shows that Solana generated higher revenue compared to Ethereum in October and November 2024.

Ethereum and Solana protocol fees | Source: TheBlock

Another important metric is trading volume on decentralized exchange platforms, or DEXs. In Solana’s case, DEX volume is almost double that of Ethereum in November. In October, SOL ranked higher on DEX volume by a relatively smaller margin.

Solana DEX volume is $77.51 billion compared to Ethereum’s $38.81 billion. For October, Solana stood at $52.5 billion versus Ethereum’s $41.4 billion.

Higher DEX volume means higher utility and adoption of one chain over another. Solana is preferred by investors in decentralized exchanges, probably due to the large volume of new projects on the Pump.fun launchpad that are listed on DEXes such as Raydium and have reached a significant threshold.

Therefore, Solana emerges as a clear favorite among decentralized investors and platforms, according to data from TheBlock.

Ethereum and Solana DEX volume | Source: TheBlock

Ethereum dominates the circulating supply of stablecoins and the total value of cryptocurrencies (TVL) locked on-chain.

Solana struggles to compete with Ethereum by a large margin in these metrics, falling behind as ETH enjoys first mover advantage. With continued adoption and demand, Solana is likely to surpass Ethereum on these metrics in the long term.

How can Solana overcome the challenges and flip Ethereum?

Solana’s ecosystem is observing the addition of new stablecoins, which will likely push the circulating stablecoin supply and TVL metric higher. Sky, a decentralized finance lending and borrowing protocol formerly known as Maker, has deployed its USDS stablecoin on Solana.

This marks the first DeFi native stablecoin launch on Solana, which could boost the Ethereum rival’s DeFi liquidity.

Solayer launched sUSD, a real-world asset-backed stablecoin on the Solana blockchain last week. The token derives its value from a diversified basket of low-risk assets, starting with US Treasury bonds, which makes it different from all other stablecoins.

Similar developments on the Solana network could help SOL overcome the network effect and first-mover advantage of Vitalik Buterin’s Ethereum blockchain, paving the way for a “pivot” in the future.

Why this matters, implications for your crypto portfolio

According to CoinGecko data, the market cap of Solana-based memecoins has surpassed $22 billion, with 70% of the top 10 meme tokens recording double-digit gains over the past seven days.

Solana’s rise against Ethereum likely catalyzed gains in ecosystem tokens, fueling meme coin rallies and boosting the industry’s overall market cap. This positively impacts crypto portfolios holding Solana, as well as dog and cat-themed and political fiction meme tokens.

Ethereum’s beta games are the Layer 2 token ecosystem and Layer 3 projects; Both categories are struggling to gain traction in the ongoing cycle.

As Ethereum struggles against competition from alternatives like Solana, crypto traders holding staking, re-staking, Tier 2 and 3 tokens are likely to observe unrealized losses in their portfolios.

Solana reached a new all-time high against Ether, we expect this from SOL price

Solana reached a record high of 0.079770 when traded against Ethereum on Monday, November 18. The landmark SOL/USDT pair for Solana is less than 10% away from its previous all-time high of $259.90 in November 2021.

The SOL/ETH pair shows the opportunity for further gains and a retest of the all-time high of 0.079770, an increase of 5% from the current level. SOL is currently trading above three exponential moving averages of 10, 50 and 200 days and has been in an uptrend for about five months.

Technical indicators, relative strength index 66 and moving average convergence divergence indicator, green histogram bars above the neutral line support the bullish thesis for the SOL/ETH pair.

If Solana breaks the all-time high and continues its gains, the SOL/ETH pair could target 0.090000, 13% above its record high.

SOL/ETH daily price chart | Source: Crypto.news

SOL/USDT is trading at $238.56, 8.95% below its all-time high on Wednesday, November 20. Technical indicators suggest that the pair could make further gains and SOL could return to its record high.

A successful retest of this level and a breakthrough could push Solana towards the psychologically important $300, 15% above the all-time high of $259.90.

The RSI is reading 73, but this could be considered a sell signal by traders, the great oscillator is flashing longer and longer green histogram bars and the MACD is showing no signs of a trend reversal.

The underlying momentum of the SOL price trend is likely positive and supports further gains in Solana.

The three EMAs can act as support in case of a market correction.

SOL/USDT daily price chart | Source: Crypto.news

Solana’s correlation coefficient with Bitcoin is 0.98, per information from Macroaxis.com. Therefore, Solana’s price trend is expected to follow Bitcoin closely; A market correction in the latter could lead to a decline in SOL and investors need to take this into account before adding to their positions in both assets.

Disclosure: This article does not constitute investment advice. The content and materials on this page are for educational purposes only.