In this article, we will take a closer look at how the top three players have performed lately—and what their trajectories might tell us about what lies ahead.
Recent developments
Peaking after a bull run and followed by negative developments in the industry in 2022, the bear market slowly began to awaken from its deep slumber toward the end of 2023.
When we look at the price action in the final months of the previous year, we see that Ether (ETH), the native cryptocurrency of the Ethereum platform, is caught between Bitcoin and SOL, the currency of the Solana platform.
But what’s behind this performance gap? Why is Ether trailing as Bitcoin and SOL pick up speed?
First, it is important to acknowledge that cryptocurrency markets are still in their early stages and lack a clear definition of “created value”—a key benchmark in traditional investment products. This makes cryptocurrency markets much more vulnerable to volatility driven by speculative activity. Volatile markets thrive on one thing above all else: narrative.
So, what’s been the prevailing narrative for investors in these three cryptocurrencies?
As the leader and established figurehead of the cryptocurrency market, Bitcoin is pretty easy to understand. Its mission is simple: to be “digital gold”—a form of money that anyone, anywhere, can use on their own terms. This narrative is simple to understand and broadly embraced. While some may find the technical details challenging to grasp, time continues to work in Bitcoin’s favor. For 14 years, this cryptocurrency has faced countless rumors of its “death”—yet, like a cockroach, it refuses to go down, surviving every time against the odds. This suggests that, for most people, the technical side isn’t a primary concern.
Expectations are also another key factor investors consider when evaluating a product. Beyond its straightforward narrative, Bitcoin has recently succeeded in establishing three key expectations.
The first of these expectations stems from a growing distrust in the long-term sustainability of government monetary policies. The monetary expansion during the COVID-19 pandemic was later followed by a period of contraction, sparking widespread debate over whether the tightening may have gone too far. A renewed phase of monetary expansion could drive increased demand for Bitcoin as an alternative investment tool.
The prospect of spot Bitcoin ETF approval in the United States represents another significant short-term driver. After rejecting all spot Bitcoin ETF applications since 2013, the U.S. Securities and Exchange Commission (SEC) finally granted approval last week. The key question now is whether this long-awaited decision will trigger a sell-off. While some predict a temporary decline, most believe that the substantial capital inflow from ETFs will have a positive long-term impact on the markets.
The third expectation involves the anticipated Bitcoin halving, scheduled to take place in April 2025. Reducing the Bitcoin block reward—currently issued every 10 minutes—will lower the amount of new Bitcoin entering circulation. Miners invest significant capital to earn block rewards and often sell those rewards to cover operational costs, creating consistent selling pressure on Bitcoin. This selling pressure is expected to ease following the halving. On the flip side, the decreasing rewards from halvings every four years could make mining less appealing over time. Should miners, vital to the system’s security and functionality, choose to leave, the Bitcoin network could face serious challenges. Thankfully, the wave of activity and fee revenue sparked by the Ordinals craze toward the end of last year seems to have eased some of these worries.
SOL: The rising star
In 2023, Solana proved to be the biggest surprise among the three cryptocurrencies. A major player in the 2021 bull market, SOL experienced a downturn during the following bear market—mirroring the broader trend across the cryptocurrency sector. But Solana’s troubles did not end with the market downturn—Sam Bankman-Fried’s collapse in November 2022 delivered a heavy hit to SOL. Once facing doubts about its very survival, Solana pulled through thanks to the resilience and dedication of its community—ultimately becoming a testament to the saying, “What doesn’t kill you makes you stronger.”
Solana tackled past setbacks like the notorious network stalls with targeted technical upgrades—later rising to lead the charge in the new bull market. Several factors contribute to this, but the most significant is Solana’s ability to offer fast and low-cost trading. These qualities make Solana a go-to platform for stress-free trading—especially appealing to crypto newcomers looking to get started. At the same time, it allows seasoned participants to engage in higher-risk, speculative trades. As a result, it provides an optimal setting for individuals seeking to introduce new tokens to the market. Specifically, incentives referred to as “airdrops,” offered for interacting with applications, contribute to completing the user acquisition cycle.
Time will reveal whether Solana’s rise is lasting and if its strong performance can hold over time. It is also important to note that Solana still holds significant venture capital backing. However, the upcoming unlocking of SOL tokens held by early investors poses a potential risk to the token’s performance.
Ether: Trapped between Bitcoin and Solana’s rise
Second only to Bitcoin, Ethereum and its native token, Ether (ETH), stood out as a key tool during the 2020–2021 bull market. Yet, we saw that ETH trailed behind BTC and SOL in the bull market that gained momentum late last year. The shift became so dramatic that the once-popular question—“Will Ethereum’s total value surpass Bitcoin’s?”—was eventually replaced by a new debate: “Could Solana’s total value overtake Ethereum’s?”
Is Ether just having a moment—or is this something more serious? For a clearer picture, let’s see how ETH stacks up against BTC and SOL.
It’s worth noting upfront that ETH is falling short of BTC and SOL in capturing the current market narrative. While Bitcoin benefits from a simple, compelling narrative as “digital gold,” Ethereum’s positioning as a “World Computer” tends to resonate less with smaller investors. Sure, Ethereum has upgrades on the way—but for most small investors, they don’t mean much.
By comparison, Ethereum just isn’t as affordable to use as Solana. Even with strong demand, Ethereum’s developers are keeping blockspace limited to ensure the network stays decentralized. To lower costs, blockspace would need to be expanded. However, this could limit the number of machines able to run the network, leading to greater centralization. Centralized systems often struggle to maintain censorship resistance over the long term.
Consequently, Ethereum finds itself caught between Bitcoin’s clear narrative and Solana’s low-cost advantage.
Can Ether turn things around, or is the outlook growing dim?
Does the future look bleak for Ether?
To answer that, we may need to take a closer look at Ethereum’s long-term game plan. Established in 2013, Ethereum has experienced a number of substantial transformations—progress that may appear gradual to close observers, yet is relatively fast in the context of infrastructure evolution. The most significant change was Ethereum’s transition away from the energy-intensive security model used by Bitcoin. The second major strategy centered on developing Ethereum’s foundational infrastructure, while offloading user-facing activity to Layer 2 blockchains.
In doing so, Ethereum put long-term vision ahead of short-term appeal— and that’s what this whole battle comes down to. Currently, Ethereum’s primary focus is on providing infrastructure that treats all chains built on it equally, while ensuring the secure storage of user funds across these networks. Had Ethereum focused on the short term, it could have reduced transaction fees by expanding blockspace. However, this could lead to centralization concerns in the long run, as highlighted earlier.
Ethereum developers’ current focus is on delivering affordable transactions to end users via Layer 2 solutions, rather than directly through the Ethereum platform. For example, the upcoming Dencun upgrade for Ethereum is anticipated to lower the costs of using Ethereum for Layer 2 solutions by a factor of ten. This will enable users to conduct more affordable transactions via efficient Layer 2 solutions.
However, this narrative delivers little benefit to the end user. For newcomers, the Ethereum platform is highly intimidating, largely due to its steep transaction fees. Though this narrative may not speak to smaller investors, it certainly captures the attention of institutional players. Ethereum remains popular, despite its steep transaction fees. Given its perception as a conventionally profitable platform, Ethereum is increasingly evolving into an infrastructure that caters to institutional investors and supports Layer 2 solutions.
Institutional investors have gravitated towards Bitcoin, driven by well-established expectations. Following the approval of Bitcoin ETFs, investors are now turning their attention to the anticipated approval of Ethereum ETFs. However, other institutional developments may also drive interest in Ethereum. The new developments planned for Ethereum will enable Layer 2 solutions to rival Solana in terms of transaction fees. Staking Ethereum gives investors an opportunity to earn bond-like returns, adding an extra layer of appeal. Now, imagine supplementing these returns with restaking, a feature that allows pledged Ether to generate additional returns on other platforms.
Let’s examine two contrasting narratives. On one hand, there is a platform that delivers significant profits through airdrops and rapid token performance, yet raises concerns about its long-term sustainability. On the other hand, we have a platform that progresses at a more deliberate pace, providing investors with fewer, yet more tangible returns. It’s reasonable to assume that small investors are more inclined to prefer the first option, while institutional investors are typically drawn to the second.
Conclusion
Bitcoin has firmly established itself with a clear value proposition and tangible future expectations. However, it faces two key long-term factors—one positive and one negative—that could influence its trajectory. The positive aspect is that time continues to work in Bitcoin’s favor. Its “indestructible” nature becomes more persuasive with the passage of time. Additionally, the ongoing trust issues driven by macroeconomic challenges continue to fuel growing interest in Bitcoin. On the flip side, there’s some uncertainty surrounding system security, primarily driven by a decline in miner interest as rewards are halved every four years. While it’s unclear whether new applications or higher transaction fees from Layer 2 platforms will sufficiently support miners, one thing is certain: it will take at least a decade before we fully understand the long-term effects of this uncertainty.
Solana, meanwhile, is positioning itself to maintain its momentum by expanding into decentralized finance (DeFi) and gaming, backed by new technical advancements and token incentives. Moving forward, it will be crucial to monitor the impact of token unlocks for investors and how this affects Solana’s performance.
On the Ethereum front, the anticipation surrounding ETF approval is creating a positive short-term outlook. However, in the long run, it will be essential to assess the affordability and security of Ethereum’s ecosystem for users, as well as the success of its Layer 2 solutions.
Note: This article evaluates potential market developments and should not be construed as investment advice.
Bu içerik en son 12 May 2025 tarihinde güncellenmiştir.
