Solana (SOL) Lags Behind Bitcoin (BTC) and Ethereum (ETH) as Realized Cap Growth Slows Down

The on-chain analytics firm Glassnode has revealed the reason why Solana (SOL) has recently been lagging behind Bitcoin (BTC) and Ethereum (ETH).

On-chain analytics firm Glassnode has offered an explanation for Solana’s (SOL) recent underperformance relative to Bitcoin (BTC) and Ethereum (ETH).

Solana’s Realized Cap Growth Slows

In a recent post on Substack, Glassnode highlighted the varying performance of Solana, Bitcoin, and Ethereum in recent times. “Examining price performance, SOL outperformed both ETH and BTC for the majority of Q4 2024,” the analytics firm noted. “However, since early December, ETH has taken the lead, outperforming the other two assets.”

As it stands, BTC has risen about 18% in the last month, ETH 28%, and SOL 3%. This marks a significant shift from earlier, when SOL was the clear market leader.

What could be driving this change in market dynamics? One possible explanation lies in the capital flows observed for these cryptocurrencies.

To gauge the capital flows, Glassnode uses the Realized Cap metric, which is an on-chain capitalization model that calculates the total value of an asset by assuming that the ‘real’ value of any token in circulation is the price at which it was last transacted on the blockchain.

Considering that the last transaction for any coin likely represents the last point at which it changed hands, the price at the time can be viewed as its cost basis. Hence, the Realized Cap is a sum of the cost basis of all coins in the circulating supply, or a measure of the total capital put in by investors.

In this context, changes in the Realized Cap essentially reflect the amount of capital exiting or entering the asset. The chart below, shared by the analytics firm, shows these outflows/inflows for Solana and others over the last seven days.

The chart displays the 7-day change in Realized Cap, highlighting the capital outflows and inflows for Solana and other assets over the last seven days. Source: Glassnode

The chart reveals that 7-day changes in Realized Cap were notably positive from September to early December. While both Bitcoin and Ethereum also experienced capital inflows during this period, SOL's growth was considerably faster.

However, the trend has reversed in the last month, with both BTC and ETH outpacing Solana. The earlier strong capital inflows might have contributed to SOL's outperformance, and their absence could explain the shift to the top two assets.

Solana Price

Solana's price has remained largely flat over the last few days, with the asset showing limited movement. At the time of writing, SOL trades at a price of $221, having risen about 3% in the last seven days.

While Bitcoin and Ethereum have enjoyed a surge in the last few days, Solana has been moving in a sideways trajectory, and its price is yet to show any substantial gains.