Ethereum Attracts 2X Solana’s Market Cap: Why Is ETH Struggling?
According to one crypto user on X, Ethereum is a different class from Solana, with the pioneer smart contract platform drawing much more capital from the community than the fourth-generation blockchain despite ETH price action being muted in the last month of trading.
Ethereum Attracted $58 Billion, 2X Solana Market Cap
In a post on November 16, @litocoen, who describes himself as a creator, noted that with Ethereum prices rising above the resistance level to trade above $2,000 in November, the coin managed to attract $58 billion in the past 30 days. The creator added that the upsurge in liquidity is twice Solana’s total market cap, further highlighting that Ethereum is a “different asset class at this point,” and the path towards $10,000 looks inevitable.
Ethereum is in an uptrend at spot rates, adding 30% in the last month of trading. Meanwhile, the daily chart shows that the coin is falling from the $2,000 level, failing to breach July 2023 highs of $2,100. Overall, ETH has been inching lower this week, failing to build on gains of November 9, much to the disappointment of optimistic traders who expected the coin to soar.
The failure of ETH to increase, building on from last week’s gains, is when leading coins, especially Solana, have been tearing higher, easing past key reaction levels as bulls reign supreme. To illustrate, SOL is up by over 200% from October lows.
Although there has been a slight cool-off from this month’s high of around $67, the uptrend is clear and defined. For now, it is unknown if SOL has reached a local peak and is likely to retrace in the sessions ahead. What’s clear is that SOL has outperformed not only ETH and Bitcoin (BTC) but most coins in the top 10, including XRP and Cardano (ADA).
Blame Liquidity For Ethereum’s Woes?
The solid performance could be partly due to the relatively low liquidity in Solana. As the creator notes, Ethereum added $58 billion in the last month, double the total market cap of Solana, which currently stands at $26 billion when writing on November 16. Lower market cap coins are typically less liquid and more volatile, marked with relatively low trading volume.
Earlier, MakerDAO, the DAO managing DAI and behind Maker, one of the largest decentralized finance (DeFi) protocols, said it was exploring the possibility of deploying a new blockchain using Solana code. This would be a significant departure if this happens because MakerDAO has historically relied on Ethereum, and DAI is only available on the pioneer blockchain.
Feature image from Canva, chart from TradingView
