As a pair of the biggest cryptocurrencies, Solana (CRYPTO: SOL) and Ethereum (CRYPTO: ETH) have a healthy rivalry. Both blockchains feature large ecosystems of meme coins, decentralized financial (DeFi) services, non-fungible tokens (NFTs), and other projects that make them appealing for investors of all stripes.
But recently, from the perspective of investing in the chain’s main coin, Ethereum has been lagging significantly, with Solana outperforming it. And as of Jan. 17, Solana just got a massive new catalyst that could make its lead even more decisive.
Here’s what you need to know and how to think about investing in these tokens.
President Trump launched an official meme coin, Official Trump, on the evening of Jan. 17. The team that launched that coin chose to do it on Solana rather than on Ethereum.
In the hours after the coin started trading, upwards of 200,000 new users were brought into the Solana ecosystem via an app designed specifically for meme coin investing called Moonshot.
The chances that the capital brought in by those new investors will someday reach the Ethereum ecosystem are not zero. Once someone has a foot in the door to cryptocurrency, it’s natural to explore various blockchains and figure out which one meshes the best with an investing style and level of technical competency. But many people might just stick with their first coin, or perhaps similar ones also hosted on Solana, for quite some time before exploring elsewhere, as it’s what they will be more familiar with.
It’s also possible that, after experiencing Solana’s negligible gas fees and nearly instantaneous transaction times, transitioning to the slower and far more expensive world of Ethereum could be something they’d prefer to avoid in the long term.
All that could be very bullish for the price of Solana. It’s also bearish for Ethereum in the context of the coin’s current underperformance. For reference, the price of Ethereum rose by 35% in the last 12 months, whereas Solana is up by 174%. And despite a reorganization of the leadership of the governance body for Ethereum in January, it’s no surprise that Ethereum holders are getting antsy while watching Solana soar.
Investors shouldn’t be rushing into any decision about whether to sell Ethereum, as it’ll clearly be around and continuing to evolve for years to come. It’s still entirely possible to develop a cogent and long-term oriented investment thesis for the coin. Still, considering whether to preferentially buy Solana over Ethereum is a more pressing issue given the current context.
