Why has SOL's performance recently lagged behind ETH under the shadow of institutional capital's covert battles?

Author: Haotian Source: X, @tmel0211

Recently, compared to the steady rise of ETH, SOL's performance has been a bit lackluster. $4,300 vs $175, what secrets are hidden behind this price gap? My personal understanding is that at a deeper level, it’s a covert battle about “who is the darling of institutions”:

1. ETH has obtained a "passport" to enter the traditional financial world - After the ETF approval, the accumulated net inflow has exceeded 10 billion USD, allowing off-market funds to enter compliantly, which is equivalent to opening a front door for institutions.

The ETF application for SOL is still pending, and the current situation is that there is a lack of funding channels, which directly affects price performance. Of course, this can also be interpreted as SOL still having room for a rebound, after all, the ETF for SOL is not completely out of the question, it just needs more time to go through the compliance process.

The key point is that ETH micro-strategies have already shown a certain institutional FOMO demonstration effect under the purchasing power of US-listed companies like SharpLink and BitMine, which will drive more enterprise treasury fund allocations, this will create huge off-exchange capital momentum for ETH on Wall Street;

2. Currently, there is a significant disparity in the stablecoin scale between ETH and SOL, with data showing 137 B vs 11 B. Everyone must be wondering, with the American blue blood genes and the on-chain Nasdaq, why has Solana fallen so far behind in this round of the stablecoin war guided by U.S. stablecoin policies?

In fact, it's not entirely SOL's fault; the ultimate test behind it is the decentralization, security, and liquidity depth of blockchain infrastructure. On Ethereum, USDC (65.5 billion), USDT, and DAI are firmly controlling the stablecoin market, and behind this is the absolute trust of institutions such as Circle and Tether in the Ethereum network.

Although the VCs behind SOL are all American investors, the new institutions on Wall Street may not take that into account and only focus on the significant data gap, which could explain why SOL cannot quickly bridge this data scale difference in the short term. However, objectively speaking, the growth rate of SOL's stablecoins is actually quite good, including PayPal's PYUSD also choosing to focus on Solana, which provides a lot of room for imagination, but patience is still needed.

3. Once upon a time, the on-chain economic vitality of SOL was off the charts, with PumpFun's daily trading volume exceeding ten million dollars, and various MEME tokens flying everywhere. However, the issue is that we are still in the accumulation phase for large institutions, and large funds care more about "hard indicators" such as compliance channels, liquidity depth, and security records, rather than how many MEMEs are on-chain in PVP.

In other words, it is not yet a retail-driven PVP narrative cycle; conversely, this on-chain vitality is precisely SOL's differentiated advantage. When the market cycle shifts and retail FOMO is reignited, the innovative gameplay and user base that SOL has accumulated may become the ignition point for the next wave of market trends.

4. As SBF's "favorite child," SOL may still be affected by the fallout from the FTX collapse, with its dramatic decline from $260 to $8 still fresh in memory. Although technically SOL has become completely independent, in the institutional memory, this association acts like a scar, occasionally brought up for discussion.

Moreover, the ability to rise from $8 back to $175 itself proves the resilience of the SOL ecosystem. The teams that continued to build during the darkest times have become the new force for SOL to reconstruct the great wall of public chains. This experience of rebirth through adversity may be a good thing in the long run.

5. ETH follows a layer 2 hierarchical approach, which, although criticized for liquidity fragmentation, precisely meets the institutional need for risk isolation. On the other hand, SOL's integrated high-performance approach runs everything on a single chain; this "All in One" model is perceived as risk concentration by institutions.

So you see, the partnership between Robinhood and Arbitrum is an example. From an institutional perspective, the high Gas fees of ETH have become an advantage for filtering high-value transactions. Although this is contrary to Mass Adoption, the main theme of the discussion is not Mass Adoption, but rather who can win the favor of Wall Street institutions.

6. Lastly, it should be added that there is a difference in the accumulation of consensus over time. ETH has a history of 9 years, while SOL has only 4 years. Although native projects like Jupiter and Jito have already demonstrated world-class product capabilities, there is still a gap in market education, ecological accumulation, and trust building compared to DeFi giants like Uniswap, AAVE, and MakerDAO.

In short, the painful memories of E-Warrior may give rise to a wave of S-Warriors under a new market FOMO, but this contest, in my view, is essentially a phased mismatch between institutional narratives and retail narratives, nothing more. After all, ETH wasn't built in a day, and the growth rate of SOL has actually been quite astonishing.