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Over the last month, the market has seen a number of unexpected developments, with altcoins such as Cardano and Solana taking centre stage and setting new highs. Toward the end of the month, Ethereum gained traction as well, with the alt posting weekly gains of 21.82 percent at press time.
It would not be incorrect to state that Ethereum and Solana had all eyes on them once speculators discovered certain similarities in their trajectories.
At press time, Solana was up by 58% and Ethereum up by 21% over the week. In fact, according to Santiment, they both took turns to have the market spotlight. However, apart from their impressive price gains, there were other notable trends too.
Ethereum stealing traction from Solana
Price increases are often correlated with social emotion, particularly in the case of altcoins. Crowd sentiment was critical in the price increases of both Solana and Ethereum. In fact, their societal power was at its peak as their prices reached new highs.
Solana’s strong social dominance coincided with its all-time high price of $119 on August 30. Only a day later, Ethereum managed to wrest control of the social metric, which crested at a high price of $3,830.
Solana dominating cashflows?
Even though Ethereum managed to steal social attention, Solana seemed to be on fire in terms of flows by assets. CoinShares’ Digital asset fund flows weekly revealed that investors have increasingly been “selling off Bitcoin funds in favor of investments tied to other cryptocurrencies.”
Solana funds, in particular, have led investment growth this month, adding more than $7 million in the week ending August 20. The same was true for Ethereum, which lost $3.2 million, while Bitcoin lost $2.8 million. Furthermore, Solana acquired BTC’s cash AUM, which totalled $15.57 million.
Aside from that, the recent NFT frenzy has played a significant influence in boosting both Ethereum and Solana. The high demand for NFT trading and investing increased ETH’s overall transaction costs, which were around 10,000 ETH per day. This was a high level, equivalent to ‘DeFi summer’ and the 2021 bull run.
Likewise, for SOL’s price, Degenerate Apes, Solana’s first big foray into NFTs, acted as a good push. Since the launch, Degen Ape sales have recorded more than 100K SOL in volume traded, with a price floor of almost 15 SOL.
Undoubtedly, Solana has had a rather quick run to glory. But, can this so-called ‘Ethereum-killer’ actually beat other Ethereum-killers or maybe Ethereum one day?
Here’s what the metrics say
Notably, both Solana and Ethereum’s daily active users (DAU) have declined. Despite a dip in DAUs, Solana’s average transaction per day increased somewhat, while its competitors fell down W/W.
SOL had 52.20 million (+6.05%) average daily transactions, while ETH had 1.17M. (-4.00 percent ). Solana’s price may experience some slight boosts in the near term as a result of the Solana Foundation’s recent announcement about an upcoming hackathon with $5M in prizes and funding.
Many in the industry regard Solana as a competitor to Ethereum since it claims to offer cheaper transactions and faster transaction speed at 50,000 transactions per second. Overall, Solana appears to be performing well, however this is primarily due to its smart contract operability and current NFT excitement.
However, if blockchains begin to incorporate smart contracts and transition into NFTs, Solana may see increased competition in the coming years.