Investor enthusiasm surrounding a potential spot ETF for ETH and SOL appears to be a major factor driving Solana’s recent price strength. Solana’s native token SOL saw an 8.5% decline from July 2 to July 3, retesting the $140 support level after peaking at $154.80 over the previous three days.
Despite this correction, SOL showed resilience as it approached $142, reflecting a 23% decrease over three months compared to a broader crypto market decline of 9% in the same period. Concerns persist among traders about SOL’s bearish trend potentially pushing its price below $140.
The anticipation of a spot Ethereum ETF launch has captured the attention of cryptocurrency investors, with expectations that such an instrument could attract $15 billion within its first 18 months. In contrast, prospects for a Solana spot ETF remain tentative for now.
The recent weakness in Bitcoin, which tested $60,000 support on July 3 amidst a 15% decline over four weeks, has contributed to overall market uncertainty. Meanwhile, traditional market highs, buoyed by strong quarterly deliveries from Tesla, have dampened demand for cryptocurrencies.
Despite these challenges, SOL investors may find solace in the potential valuation benefits stemming from an approved Ethereum ETF. The correlation between ETH and SOL has historically been strong, currently standing at 89%, suggesting potential price alignment if Ethereum’s market cap expands significantly.
Solana’s blockchain activity remains robust, with notable DApps generating substantial fees. Over the past 30 days, Solana accrued $49.3 million in fees, while top DApps like Raydium, Jito, and Pump contributed a combined $83.7 million. Comparatively, Ethereum’s fees totaled $131.8 million, bolstered by leading DApps like Lido, Uniswap, and AAVE generating $160.9 million.
Despite Ethereum’s dominance in DEX activity and higher fee generation, Solana has positioned itself as a formidable competitor with $7.2 billion in weekly DEX volumes and a 3% increase in deposits over the past week. This trend underscores Solana’s growing appeal despite Ethereum’s larger market cap.
Critics caution against solely comparing Solana’s metrics to Ethereum’s, citing differences in transaction costs and active addresses. However, Solana’s expanding network and robust DApp ecosystem continue to strengthen its case relative to Ethereum.
In conclusion, while challenges persist in the crypto market, Solana’s resilience near the $140 support level and its strategic positioning relative to Ethereum suggest potential for continued growth, especially with developments in the ETF landscape and ongoing blockchain activity trends.
