NEW DELHI (CoinChapter.com) — Solana (SOL) investment products beat Ethereum (ETH) in 2023, according to the CoinShares digital asset funds flow report. The blockchain platform might continue outperforming Ethereum as L2 blockchains continue taking center stage.
The CoinShares report noted that Bitcoin (BTC) continued to be the favorite of investors, likely due to the spot ETF hype. BTC investment products attracted nearly $2 billion in inflows in 2023.
Surprisingly, Solana came in second with $167 million in inflows in 2023, while Etheruem investment products only saw $78 million in inflows, about 53% less than Solana.
A few challenges in 2023 helped Solana outperform Ethereum as traders’ favorite. The transition to the Proof-of-Stake (PoS) model introduced new concerns regarding centralization and consensus mechanism complexity.
The new issues added to the challenges Ethereum was already facing, such as privacy and Layer-1 scalability. Furthermore, the emergence of L2 blockchains with faster transaction processing times and lower gas fees also cut into Ethereum’s user base.
Additionally, Ethereum’s dominance in the NFT sector declined. Once a favorite of NFT traders, Ethereum experienced a drastic decline in mintings and trading volumes. Ethereum-based NFT trading volume declined by nearly 59% in 2023.
The trend suggested a loss of investor interest, exacerbated by rising competition from other blockchains.
What Went Right For Solana
2023 was a difficult year for Solana, too, thanks to its association with the doomed crypto exchange FTX. However, the blockchain platform continued to build partnerships and expand its ecosystem. The growing interest in the DeFi sector also helped Solana sideline Ethereum.
The team at Solana has made expansive plans for 2024, with DeFi being a key focus point. Platforms like Orca and Raydium would likely lead the way for Solana’s DeFi expansion plans. The projects focus on yield farming and liquidity provision, making the DeFi sector more accessible to retail traders.
Moreover, market participants speculate that Solana NFTs might sideline Ethereum NFTs in 2024. One reason behind the speculation is that Solana NFTs are cheaper to trade than those on Ethereum, which could attract new market entrants.
Solana’s TVL also reversed its decline as a result of an increase in deposits and usage of its DApps. It seems likely that L2 blockchains and Solana would likely continue sidelining Ethereum in 2024.
SOL Bulls Defend EMA Support
Meanwhile, the SOL price is currently consolidating above the 20-day EMA (red wave) dynamic support. Despite the bearish pressure, Solana’s price spiked 5.5% to reach a daily high near $102 before retreating.
If the sell-off continues, the SOL price might drop to the 50-day EMA (purple wave) support near $83. Breaching the immediate support could see Solana price test the 100-day EMA (blue wave) support near $64.
Conversely, a rally from here would see the SOL price break above $110 before targeting the resistance near $128.
The RSI for SOL remained neutral, clocking a score of 56.01 on the daily charts.
