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.
Should investors sell immediately? Or is it worth buying Solana?
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.
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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