As the year draws to a close, Solana finds itself in a challenging position. Its token price remains significantly depressed from recent highs, and on-chain activity shows clear signs of contraction. Yet, a striking divergence is emerging: key revenue projections suggest the network is poised to eclipse Ethereum in annual earnings. This clash between bearish market sentiment and robust underlying economics prompts a critical examination of Solana’s true valuation.
Institutional Accumulation Amid the Slump
Interestingly, the current price weakness appears to be attracting sophisticated investors. Data from December 18 revealed that Solana-focused exchange-traded funds (ETFs) attracted net inflows of $11 million. This institutional interest is mirrored by activity from large holders, or “whales.” One notable example is a major investor who purchased 41,000 SOL, worth approximately $5 million, when the price dipped below $120.
This accumulation occurs against a backdrop of concerning technical indicators. Trading around $126, Solana’s price sits roughly 52% below its September peak. The decline is primarily attributed to two factors.
- A Sharp Drop in Network Activity: The Total Value Locked (TVL) within Solana’s decentralized finance ecosystem has plummeted by over 34% since mid-September to $8.67 billion, marking its lowest point since June. Major protocols, including Jito and Raydium, have experienced substantial capital outflows.
- The Memecoin Frenzy Fades: Trading volume for memecoins, once a primary driver of activity on the network, has nearly evaporated. Weekly volume has collapsed from $56 billion in January to a mere $2.7 billion.
Furthermore, competitive pressure is intensifying. While Solana’s transaction count grows at a modest 4% per month, rivals like Polygon (+89%) and Base (+34%) are expanding at a much faster rate.
The Impending “Flipping” of Ethereum
Despite these headwinds, a fundamental shift in network economics is underway. On December 21, founder Anatoly Yakovenko shared analysis from DeFi Development Corp forecasting Solana’s annual revenue to reach $1.4 billion in 2025. In a direct comparison, Ethereum is projected to generate just $522 million over the same period.
Should investors sell immediately? Or is it worth buying Solana?
These figures highlight Solana’s exceptional efficiency in generating economic value, even during phases of declining user engagement. For long-term investors, this disparity suggests the network’s market capitalization may not fully reflect its fundamental earning power.
Critical Technical Levels to Watch
From a chart perspective, Solana is approaching a decisive juncture. The 200-week moving average, currently near $118, serves as the most critical support level. A sustained break below this line could trigger further selling pressure toward the $100 to $110 range. On the upside, any recovery attempt faces immediate resistance at the $130 mark.
As 2025 concludes, the battle zone between $118 and $130 will be crucial for market participants. A successful defense of the key support level, coupled with the strong revenue forecasts and anticipated technical upgrades like “Alpenglow,” could establish a foundation for a potential recovery in 2026.
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