Solana Hits All-Time High Against Ethereum, Driven by Transaction Growth and DEX Volume

Key Takeaways

• Solana (SOL) reached an all-time high against Ethereum (ETH).
• Solana leads in active addresses and transactions and is closing in on DEX volume.
• Another 400% increase is needed for Solana to flip Ethereum’s market capitalization.

The Solana price reached an all-time high against Ethereum today, Oct. 24, the culmination of a considerable increase that has been ongoing since December 2022.

The increase temporarily stalled at the beginning of the year but has picked up since September.

Let’s examine the SOL/ETH price action and different on-chain metrics to understand the reasons behind this trend and determine whether it will continue.

SOL/ETH Reaches All-Time High

The SOL/ETH ratio has increased rapidly since its low in December 2022. The increase led to a new all-time high of 0.069 ETH today, on Oct. 24. Measuring from the absolute low, Solana has outperformed Ethereum by 930%.

Despite this increase, the price action is mixed. On the bullish side, SOL cleared the final horizontal resistance area at 0.053 ETH and validated it as support several times (white icons).

On the bearish one, SOL/ETH follows an ascending resistance trend line despite consistently reaching higher highs (black icons). The trend line is preventing the price action from going parabolic.

Technical indicators lean bullish but are not decisive. The Relative Strength Index (RSI) broke out from its bearish divergence trend line (green) and is increasing, nearly above 70.

However, the Moving Average Convergence/Divergence (MACD) has not crossed above its bearish trend line yet and shows a decline in momentum.

So, the weekly time frame readings are inconclusive in determining the direction of future trends. Whether or not the price breaks out above the trend line can help determine this trend.

Solana’s market capitalization is nearly $82 billion, while Ethereum’s is $308 billion. If supplies remain constant, another 400% increase is needed for Solana to flip Ethereum.

This means that a SOL/ETH price of 0.24 ETH will cause Solana to become larger than Ethereum.

Solana vs Ethereum

A quick look at the metrics of Solana and Ethereum shows that Solana leads in total transactions and active addresses but trails in Decentralized Exchange (DEX) volume. The numbers for Ethereum also include all its Layer-2s.

If we only include Ethereum, the numbers are much closer though Ethereum still leads by $167 to $154 billion. The difference between the two has been shrinking in the past year.

The DEX volume is interesting since Solana’s meme coin platform Pump.fun is reaching new highs every day, likely fueled by the rise of meme coins such as GOAT and POPCAT, which are both at all-time highs.

However, Raydium still leads Solana DEX volume handily.

Since Solana has lower fees than Ethereum, it could be better suited for DEX use in the future. Uniswaps launch of its Layer-2 chain, Unichain, can also affect Ethereum’s DEX volume.

Another thing that could potentially aid in this Solana outperformance is the massive increase in liquid staking. Solana’s liquid staking market cap has increased from $500 million to over $4 billion in the past year.

This could contribute to increased activity in the network while allowing stakers to reap the yield and rewards from their staked SOL.

The only metrics where Ethereum leads Solana are revenue and Total Value Locked (TVL). In the past year, Ethereum has a revenue of $1.64 billion while Solana has only $200 million, a more than eightfold difference.

Ethereum is in first place, while Solana is in sixth. As for the TVL, Solana is $7.83 billion, while Ethereum is $52 billion.

However, it is worth mentioning that Ethereum is 55% away from its all-time high of $116 billion, while SOL is roughly 25% away from its all-time high.

So, while Ethereum still leads in security, as evidenced by the difference in revenue and TVL, the gap is shrinking. Solana leads in almost every other metric.

Future Trend Undetermined

Since the bottom in December 2022, the Solana price has outperformed Ethereum by roughly 900%. On-chain Solana metrics are also closing the gap, especially evident in DEX volume.

This gap will likely continue closing because of Solana’s lower fees and flourishing meme coin ecosystem.

However, the future SOL/ETH trend is still undetermined.