Ethereum’s decline against both Bitcoin and Solana reveals cracks in its once-unshakable lead.
Ethereum, long regarded as the king of smart contract platforms, is facing an intensifying challenge from Solana—its leaner, faster, and increasingly more efficient counterpart. Recent market dynamics suggest the winds of change are blowing, and Ethereum might be losing its dominance, not just in its niche but across the broader crypto landscape.
Follow the Volume: DEX Activity
CoinGecko's 2025 Q1 Crypto Industry Report (bottom chart below) shows a revealing breakdown of DEX trading volume by blockchain. Ethereum remains a dominant player, consistently making up a large chunk of monthly trading volume. However, Solana has carved out a significant and growing share.
In January 2025—the peak of the quarter—DEXs processed a whopping $358 billion, with Solana commanding the second-largest share after Ethereum. Here’s the kicker: while Ethereum’s share has remained relatively stable, Solana’s has expanded, especially during months of high trading activity (like December 2024 and January 2025). This was the time when the Solana-based Meme coin mania was in full swing.
Ethereum’s Weakness Against Bitcoin
While Solana steals the spotlight, Ethereum’s struggles against Bitcoin are equally concerning. The ETH/BTC ratio’s decline to 0.02 signals that Ethereum is losing value relative to the market’s leading cryptocurrency. This isn’t a new trend—Ethereum has been underperforming Bitcoin since its 2022 peak—but the reasons behind it are multifaceted.
Bitcoin’s narrative as a "store of value" has solidified in recent years, especially as institutional adoption grows. Bitcoin spot ETFs, which gained traction in 2024, have drawn significant capital, reinforcing BTC’s dominance. Ethereum, positioned more as a "technology play" for smart contracts and DeFi, has struggled to maintain investor confidence amid market uncertainty. Rising interest rates and macroeconomic pressures more recently have led investors to favor Bitcoin’s perceived safety over Ethereum’s higher-risk, higher-reward profile.
Also, Ethereum faces a perception problem. While it pioneered smart contracts, newer chains like Solana have captured the “next big thing” narrative. Ethereum’s layer-2 ecosystem, though thriving (as seen in the DEX volume chart with Arbitrum and Optimism), creates complexity for users who must navigate bridges and varying fees. Bitcoin, by contrast, remains simple and singular in its purpose, which has helped it maintain market dominance.
Why is Solana Winning?
Several factors appear to be driving Solana's strong performance against Ethereum:
🞊 DEX Trading Volume Distribution: CoinGecko's Q1 2025 data reveals Solana's impressive market share in decentralized exchange (DEX) trading volume. While Ethereum still maintains a significant base in this sector, Solana's purple segment shows substantial presence across all months, particularly in January 2025 when total DEX volume reached $358 billion.
🞊 Technical Performance: Solana's renowned speed and low transaction costs continue to attract developers and users seeking efficient blockchain interactions, addressing pain points that have historically plagued Ethereum.
🞊 Ecosystem Maturation: After weathering several challenges in its earlier days, the Solana ecosystem has demonstrated impressive resilience and growth, establishing itself as a legitimate competitor rather than merely an "Ethereum alternative."
🞊 Institutional Adoption: The sustained growth suggests increasing institutional comfort with Solana, marking its evolution from a speculative asset to an established platform in the blockchain space.
What’s Next for Ethereum?
Ethereum’s challenges are clear: Solana is eating into its DeFi market share with superior speed and cost, while Bitcoin continues to outshine it as a store of value. The SOL/ETH ratio’s all-time high and the ETH/BTC ratio’s decline are wake-up calls for Ethereum’s community. To regain ground, Ethereum must address its scalability issues more aggressively—perhaps by accelerating layer-2 interoperability and/or further reducing layer-1 costs.
Upcoming upgrades like the “Verge” (focused on stateless clients) could help, but they’ll need to deliver tangible benefits for users and developers. Solana, meanwhile, must prove its resilience. Its history of network outages (most notably in 2022) remains a concern, though recent stability has bolstered confidence. If Solana can maintain its momentum, it could cement itself as Ethereum’s strongest peer.
As for Ethereum’s weakness against Bitcoin, a shift in market sentiment—perhaps driven by a DeFi boom, improving macroeconomic conditions or a killer app on Ethereum’s layer-2s—could help ETH reclaim some ground. But for now, Ethereum finds itself squeezed between a resurgent Solana and a dominant Bitcoin, fighting to prove it’s still the blockchain to beat.
Originally published on Substack.
