Despite maintaining strong on-chain fundamentals, Solana (SOL) has seen a 10% decline over the past week, making it one of the worst-performing top Layer-1 cryptocurrencies in the same timeframe.
The blockchain’s Total Value Locked (TVL) rose 2.67% in the past 24 hours, with consistent user retention and a 500% month-on-month surge in stablecoin volume. However, the market’s risk-off sentiment continues to weigh heavily on SOL’s price.
Institutional sentiment also highlights the growing divide. DeFi Dev Corp. (NASDAQ: DFDV), in its July earnings report, revealed a 91% month-on-month increase in its SOL holdings, now totaling 1.18 million SOL, valued at approximately $204 million. Despite this aggressive accumulation, Solana closed the month with just an 11.57% gain, while Ethereum surged by 48.76%. Additionally, the SOL/ETH ratio declined by 25%, its worst monthly performance since 2022.
Ethereum’s dominance is further supported by a rise in wallets holding over 10,000 ETH, signaling a shift of smart money toward ETH. On the other hand, Solana has witnessed a decline in such high-net-worth wallet activity, weakening its comparative strength. As the SOL/ETH ratio approaches critical yearly support levels, analysts suggest that Solana could face further downside if capital rotation continues favoring Ethereum.
To regain momentum and challenge the $200 psychological resistance, Solana would require a strong risk-on catalyst. Without such a trigger, the bearish divergence may persist, prolonging the underperformance against its major rivals.
