Why Solana has been outpacing Ethereum
Solana is currently the sixth largest cryptocurrency, with a market cap around $95 billion.
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Bitcoin seesawed under $100K as volatility gripped markets. Also: ETF inflows surged and Fed chief nixed near-term rate cuts.
Why SOL has been outpacing ETH lately. A closer look at how two of the most prominent cryptocurrencies have been performing.
USDC’s market cap just notched an all-time high. And more key stats from the cryptoverse.
MARKET BYTES
As volatility rolls on, crypto ETF inflows continue to surge
Crypto prices continued their wild ride for another week, with values rising and sinking to the rhythm of a supercharged news cycle.
On Friday, BTC, ETH, and XRP all briefly saw gains following a mixed U.S. jobs report. But then prices dipped on Sunday after the Trump administration announced new tariffs on steel and aluminum — before whipsawing again following a hotter-than-expected inflation report on Wednesday. BTC hovered near $97,000 as of Wednesday afternoon.
Despite the volatility, crypto investment products (primarily spot BTC and ETH ETFs), saw their fifth consecutive week of inflows — with last week’s $1.3 billion in new capital nearly doubling the previous week’s $747 million.
Even more surprisingly, Ether ETFs saw bigger inflows than BTC ETFs, as traders seemingly took advantage of a sharp dip in ETH prices over the weekend.
Here are three more market stories to know about…
Fed chair not “in a hurry” to lower interest rates
Last year, crypto prices surged after the Federal Reserve cut interest rates three times, with multiple further cuts considered likely in 2025. But with inflation remaining stubbornly above the Fed’s 2% target and a broadly strong economy, the central bank has slowed the rollout of further cuts.
On Tuesday, speaking before the Senate Banking Committee, Fed Chair Jerome Powell suggested that no further cuts are imminent, saying “we do not need to be in a hurry to adjust our policy stance.”
And following Wednesday’s hotter-than-anticipated CPI report, Powell remained measured: “We don’t get excited about one or two good readings and we don’t get excited about one or two bad readings,” he told the House Financial Services Committee.
Amid the flurry of macroeconomic headlines, BTC prices dipped nearly as low as $94,000 on Wednesday morning before climbing back around $97,000.
Rebanking… One issue of major concern for the crypto industry has been “debanking” — when government regulators pressure banks into avoiding working with crypto companies. Powell said that it was time to "take a fresh look" at the issue.
MicroStrategy rebrands and resumes BTC buying spree
Last week, after briefly pausing its bitcoin-accumulation efforts, the publicly traded software firm MicroStrategy rebranded itself as “Strategy,” reflecting founder Michael Saylor’s belief that the firm is now primarily a “Bitcoin Strategy Company.”
Strategy also went back to work buying more crypto, reporting a purchase of 7,633 BTC in the week ending Feb. 9 — bringing the firm’s total holdings to 478,740 BTC (worth around $46 billion as of Tuesday). Even though Strategy reported a net loss for the fourth quarter of 2024, its stock remains a huge hit on Wall Street.
“Strategy’s shares have skyrocketed more than 400% over the past year, and the company’s $83 billion market cap trumps that of companies such as Capital One and Target,” Fortune notes.
Popular strategy… A growing number of companies are emulating Strategy and buying bitcoin of their own. According to the Financial Times, there are now 78 listed companies that hold BTC in their corporate treasuries.
“High odds” for new crypto ETFs to gain approval
Bloomberg ETF analysts James Seyffart and Eric Balchunas said odds are “high” that a variety of new spot crypto ETFs (funds that would buy crypto and sell shares via conventional stock market exchanges) will receive SEC approval this year.
How high? “The analysts estimate that Litecoin ETFs filed by Canary Capital and Grayscale have the highest chance of approval, rating those filings as possessing a 90% chance of approval” reports The Block. “After Litecoin, Dogecoin products received a 75% chance of approval, followed by Solana and XRP products, which the analysts expect have a 70% and 65% likelihood of approval, respectively.”
These odds represent a huge shift in sentiment under the Trump administration and crypto-friendly leadership in the SEC and beyond. Seyffart claims that the pre-election chances for many of these ETFs was below 5% — adding that these increasingly favorable odds “will likely grow the more we see these go through the typical process.”
I want my ETF… On Monday, NYSE Arca (a subsidiary of the New York Stock Exchange) filed paperwork on behalf of Grayscale to create the first U.S.-based spot Cardano exchange-traded product. According to Bloomberg’s Balchunas, it marked the 60th spot crypto ETF application of 2025.
SOL CYCLE
Why has Solana outperformed Ethereum recently?
Over the last year, as crypto markets have surged to all-time highs, the two most prominent smart-contract-compatible blockchain tokens have taken very different journeys.
Solana (the sixth-biggest cryptocurrency by market cap) was created in 2020 as a faster, cheaper alternative to Ethereum (the second biggest). But since the end of 2023, SOL has become one of the market’s biggest outperformers, while ETH has lagged behind other major tokens.
Last week, asset manager VanEck predicted that SOL could reach $520 before the end of 2025 (compared to around $195 on Wednesday). At the same time, JPMorgan released a report warning that ETH — which sank to around $2,500 on Sunday (compared to an all-time high north of $4,100 in 2021) — could continue to underperform throughout this year.
How did SOL and ETH arrive at their current narratives, and where could things go next? Here’s what you need to know…
Quick refresher — what is Solana?
Solana is a layer-1 blockchain built for running crypto applications at scale, and SOL is its native cryptocurrency. Solana’s major innovation is its speed and throughput: It can process more than "1,000 transactions per second,” compared to 15 TPS on Ethereum. And it can cost just fractions of a cent to process transactions. The network supports a variety of apps and projects including decentralized exchanges, lending protocols, and memecoins.
How has it performed during the bull market?
Since the end of 2023, SOL has been one of the best performing assets in the market, rising from around $19 in Sept. 2023 to $203 on Monday, a nearly 1,000% gain. ETH, in comparison, has risen around 68% in that same span.
SOL’s sizable gains can be attributed at least in part to its status as the blockchain of choice for memecoins, as well as a series of popular applications across a number of major blockchain narratives like lending protocols, crypto-focused AI agents, and decentralized physical infrastructure.
Solana, which already controls about 15% of the market for smart-contract platforms, is expected to see that market share rise to 22% by the end of this year, according to VanEck.
SOL also could get a spot ETF (or potentially several) of its own this year, pending approval by the SEC, which could attract more investor capital into the asset.
Why has it attracted so much activity?
Solana’s speedy, cheap transaction processing and sustained real usage are seen as the primary reasons for its massive popularity — giving rise to a vast ecosystem of memecoins, games, NFTs, and even cellphone networks.
For the past four months, Solana has outpaced Ethereum in monthly onchain trading volume. There was more than $640 billion in onchain volume using Solana last year, and hundreds of thousands of tokens were launched on Solana in that same period. In January 2025 alone, onchain volume was already more than $260 million, according to DefiLlama.
During the last bull market, from 2019 to 2022, Ethereum is where viral memecoins like SHIB launched. But this time, SOL has effectively replaced ETH as the favored platform for launching coins— hosting BONK, WIF, Moo Deng, Official Trump, and many more.
Last year, Solana became the first blockchain since 2016 to attract more new developers than Ethereum, onboarding 7,625 new software builders.
What’s the outlook for ETH?
Analysts are divided on Ethereum’s prospects. A recent report from JPMorgan noted reasons for concern, citing ETH’s 10% share of the overall crypto market cap — its lowest mark since 2020 — and continued “intense” competition from other networks.
Still, investor interest in ETH remains active — spot Ethereum ETFs attracted $793 million of inflows last week, potentially taking advantage of low prices.
Ethereum also remains the leader in the two biggest areas of interest for institutional finance: stablecoins and tokenization (making traditional financial products tradable on blockchains). More than $130 billion of stablecoins circulate on ETH, as well as nearly $4 billion in tokenized assets. Both are areas where the Ethereum community is working to maintain traction via an initiative called Etherealize, which is aimed at marketing Ethereum to Wall Street institutions.
“We looked around and saw that institutional education about ETH was woefully lacking,” said Etherealize co-founder Grant Hummer. “Etherealize is here to fix not only that, but to bring all of Wall Street (and ultimately, the world) onto Ethereum rails.”
NUMBERS TO KNOW
114.7 trillion
Bitcoin’s new all-time high mining difficulty, meaning that it's about 114.7 trillion times harder to mine a current block of Bitcoin than the blockchain’s original blocks back in 2009. The increased difficulty has put pressure on miners, who need to invest in higher computational power to participate.
$56 billion
New all-time-high market capitalization of USDC, the digital-dollar stablecoin issued by Circle. What accounts for the growth? “Whether for payments, remittances, trading, or decentralized finance,” notes a Coinbase blog post, “USDC continues to be a go-to stablecoin for global transactions.” (Coinbase is a founding partner in USDC.)
19
Number of U.S. states currently considering investing public funds in digital assets or crypto ETFs after North Carolina became the most recent to announce such plans on Monday. As the conversation around a potential federal strategic bitcoin reserve continues to evolve in Washington, a growing list of states have made similar moves of their own this year. Last year, Michigan and Wisconsin became the first two states to hold crypto in their pension funds for public employees.
TOKEN TRIVIA
When is the next Bitcoin halving?
A
2025
B
2026
C
2027
D
2028
Find the answer below.
Trivia Answer
D
2028
