Solana Outperforms Ethereum in 2025

Solana has had an impressive start to 2025, outperforming Ethereum for 47% of the year, hinting at a possible shift in market sentiment. However, recent developments raise questions about its continued dominance.

Despite strong overall performance, Solana has experienced a 24% drop in DEX volume this week, leading to speculation about a potential turning point. The ecosystem’s momentum may be slowing down—could this be a temporary setback, or are we seeing the beginning of a shift in Solana’s market position?

Solana: Signs of a Momentum Shift?

Recent data highlighted Solana’s remarkable outperformance against Ethereum throughout much of 2024, with a significant surge in Q4. However, cracks have begun to appear in this trend. The number of days in which Solana outperformed Ethereum has plateaued, which suggests its relative strength might be fading.

The correlation between SOL and ETH price movements is tightening, diminishing Solana’s previous advantage. Given the downturn in DEX volume, it raises questions about whether Solana’s dominance was a fleeting phenomenon or if its fundamentals still justify a strong market lead.

Recent Decline in SOL DEX Volume

Solana’s DEX volume has dropped significantly, with a 38% decrease in the last week, marking the fifth consecutive week of declining volumes. Leading DEXs like Raydium and Orca have witnessed drops of 54.34% and 20-30%, respectively.

Several factors could be contributing to this decline. The rise of memecoins, particularly the controversial LIBRA token, has led to significant losses for investors and tarnished Solana’s reputation, resulting in reduced user engagement and trading activity. Moreover, broader market downturns are reflected in Solana’s on-chain volumes, mirroring reductions across other blockchain networks, indicating a general cooling of DeFi activities across the sector.

Ethereum Momentum: Here to Stay?

Ethereum was trading at $2,801.32, up 1.37% while trying to recover from recent lows. Technical indicators indicated mixed momentum; the RSI hovered below the neutral 50 level, suggesting neither strong buying nor selling pressure. In contrast, the MACD histogram showed early signs of bullish momentum.

In January 2025, Vitalik Buterin announced leadership changes within the Ethereum Foundation, focusing on Layer 2 scalability and interoperability. A recent injection of $120 million worth of Ether into DeFi protocols is expected to keep the ecosystem strong. However, Ethereum faces challenges such as network congestion and rising competition from Solana. While Buterin’s updates may provide long-term strength, Ethereum must overcome its longstanding hurdles to rise above and maintain its position against Solana.