Solana's (SOL) Weekly Price Drop by 10% Stands in Contrast to Robust On-Chain Development

Solana's (SOL) Weekly Price Drop by 10% Stands in Contrast to Robust On-Chain Development

In the ever-evolving world of cryptocurrencies, Solana's recent performance against Ethereum has been a topic of interest. Despite strong on-chain fundamentals and ecosystem growth, Solana has underperformed Ethereum in the recent market.

The primary reasons for this underperformance can be attributed to shifts in institutional investor preference, regulatory clarity, and competitive challenges.

Institutional Capital Shift to Ethereum

There has been a notable migration of institutional funds from Solana to Ethereum, which returned stronger price gains in July 2025. Ethereum’s growing ETF prospects and perceived institutional-grade security make it more attractive for large investors.

Regulatory and Security Confidence

Ethereum benefits from clearer regulatory status and more robust security features, such as its Ethereum 2.0 proof-of-stake network and extensive Layer 2 scaling solutions like Arbitrum and Optimism. These contribute to sustained investor confidence and price stability, despite slow, steady progress.

Solana’s Network Outages and Technical Risks

Although Solana boasts high throughput, low fees, and rapid ecosystem expansion, its history of network outages raises concerns about reliability, potentially limiting price gains.

Competitive Pressure from Ethereum Layer-2s

Ethereum’s Layer-2 solutions improve scalability and reduce transaction costs, narrowing Solana’s performance advantages and increasing competition for developers and users.

Market Sentiment and Price Volatility Disconnect

Despite robust on-chain metrics like a 500% stablecoin volume surge and over 2% Total Value Locked growth in Solana, price performance has lagged due to investor sentiment favoring assets seen as less risky or with stronger regulatory outlooks.

Despite these challenges, projections still remain optimistic for Solana’s medium-term price growth if it avoids outages and maintains user activity. However, near-term market preference clearly favors Ethereum.

Key Developments in Solana

In positive news, Solana's protocol-level throughput has increased by 500% month-over-month. The Seeker phone by Solana Mobile has started shipping to over 50 countries, and DeFi Dev Corp. has increased its SOL holdings by 91% in July.

Moreover, Solana closed the month up by 11.57%, while Ethereum rallied by 48.76% in the same period. Solana's Total Value Locked (TVL) has grown by 2.67% in the last 24 hours.

Looking Ahead

The next few weeks will be crucial in determining whether Solana can reverse the current trend and capitalize on its strong ecosystem fundamentals. A potential double bottom pattern could form if the support at $157.70 holds. Breaking through the $207 resistance level could lead to a potential 26% gain from current levels.

The market continues to show preference for Ethereum, with the SOL/ETH ratio remaining under pressure. However, the potential approval of a Solana spot ETF in October could serve as a stronger catalyst for SOL.

In conclusion, while Solana's ecosystem development remains strong, the combination of institutional capital reallocation, regulatory clarity favoring Ethereum, technical reliability concerns, and Layer-2 competitiveness explain Solana’s recent price underperformance relative to Ethereum.

1. Despite Solana's strong on-chain metrics and pursuit of institutional funds, the migration of capital from Solana to Ethereum, driven by Ethereum's growing ETF prospects and perceived institutional-grade security, has been a significant factor in Solana's underperformance against Ethereum.
2. Ethereum's advantage over Solana is further accentuated by regulatory and security confidence, primarily due to Ethereum's clearer regulatory status, Ethereum 2.0 proof-of-stake network, and extensive Layer 2 scaling solutions like Arbitrum and Optimism, which encourage sustained investor confidence and price stability.

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