Why Solana Could Find It 'Much Harder' To Outperform Ethereum After An ETF Approval

Zinger Key Points
  • Crypto trader notes that after an Ethereum ETF approval, it will be very difficult for Solana to keep outperforming Ethereum.
  • He adds that significant inflows will be required for Solana, as Ethereum now has the advantage of ETF institutional investments.

Pseudonymous cryptocurrency trader Wazz Crypto discussed the significant challenges Solana SOL/USD will face in outperforming Ethereum ETH/USD moving forward, touching on critical metrics and market dynamics.

What Happened: Wazz presents a compelling argument suggesting that "it will be much harder for SOL to keep outperforming ETH from here." He notes that while SOL experienced a 96% decline during the bear market, compared to ETH’s 75%, it was easier for SOL to achieve significant returns due to a simple mean reversion. However, they believe "the meat of the move should be done."

Quick overview of both the altcoins historical performance:

Cryptocurrency1-Week Gain1-Month Gain1-Year Gain
Ethereum ETH/USD+28.5%+17%+105%
Solana SOL/USD+8.5%+8.4%+764%

The trader notes the disparity in inflation rates between the two cryptocurrencies, with current ETH inflation at historical lows and SOL’s inflation significantly higher. "Current $ETH inflation is at historical low gas is $5M daily, current $SOL inflation is $13M daily."

Additionally, the aftermath of billions of SOL bought by FTX at $60-$80 presents a supply overhang that could hinder its performance.

Also Read: Will Solana Or Dogecoin Be The Next Crypto ETF If The Ethereum ETF Is Approved?

Why It Matters:  While acknowledging Solana’s success in terms of on-chain activity, Wazz Crypto remains skeptical about its sustainability. "Solana on-chain activity is all meme coin gambling, it's doing great but I'm not sure how long it is sustainable with this high churn rate," they caution.

In contrast, they emphasize Ethereum’s institutional advantage, particularly with the potential for an ETF approval, and its robust DeFi ecosystem. "Defi on ETH/EVM is much more vibrant than Solana by multitudes," they add.

However, Wazz Crypto does recognize a potential edge for Solana. "I think the biggest advantage SOL might have here is one of the DePin apps really taking off and onboarding millions of users to the chain," they concede, suggesting that a breakthrough app could shift the dynamics.

The trader concludes, "ETH value accrual is 15x more capital parked there which is mostly sticky and likely won’t be moving anywhere anytime soon," they explain, underscoring the stability and attractiveness of ETH for investors.

What’s Next: The influence of Ethereum as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

Read Next: Solana Meme Coin Platform Pump.Fun Exploited For $1.9M, Vows To Repay Users

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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