Why are hedge funds favoring Solana over Ethereum in 2026?

The Solana (SOL) blockchain, often referred to as the “Ethereum killer,” has put up strong competition against Vitalik Buterin’s creation. That is why the Happy Coin News editorial team decided to look into why, in 2026, hedge funds are favoring SOL over ETH.

The Solana (SOL) blockchain, often referred to as the “Ethereum killer,” has put up strong competition against Vitalik Buterin’s creation. That is why the Happy Coin News editorial team decided to look into why, in 2026, hedge funds are favoring SOL over ETH.

How much capital was moved from Ethereum to Solana?

In early January 2026, several media outlets cited analysis from an unnamed analyst claiming that hedge-fund employees have been quietly rotating capital—pulling funds out of Ethereum and investing them into Solana. The exact deal size was not disclosed, but the scale can be inferred from the ETF market. During four trading sessions from January 7 to January 12, ETH-based exchange-traded funds lost $346.2 million.

Inflows and outflows from U.S. Ethereum ETFs

Over the same period, SOL-based funds attracted $26.4 million, bringing their total capitalization to reopening?? (kept literal): $542.4 million. Therefore, it can be assumed that hedge funds rotated capital in the range of several tens of millions of dollars. This figure is indirectly supported by Solana’s moderate 2.8% price increase over the past week. If the investment amount had been significantly larger, the cryptocurrency’s price would have risen more strongly.

Growth in Solana-ETF capitalization

Why is capital migrating from Ethereum to Solana?

Possible reasons for hedge funds shifting funds from ETH into SOL include:

• Solana’s price has greater upside potential in percentage terms;

• Ethereum’s blockchain is becoming too fragmented and complex;

• the SOL network is faster and has lower transaction fees.

By market capitalization, Solana is nearly five times smaller than Ethereum, meaning far less investment is needed to push SOL’s price higher. Accordingly, during an altcoin season, Solana has a chance to appreciate more than ETH. However, historical data suggest Solana holders should not get overly excited. In January 2025, the crypto’s peak price exceeded the November 2021 high by only 13%, and in September last year the asset’s price fell 14% short of its all-time record. Therefore, in the next bull rally, SOL is unlikely to exceed even $300, and in the best case may rise by 107% from the current level.

Solana price peaks on the chart

Ethereum’s fragmentation and complexity are driven by the existence of numerous Layer-2 networks and bridges. Layer-2 networks also exist on Solana’s mainnet, but there are far fewer of them, and their necessity is questionable given the lack of a scaling need for the SOL blockchain. A simpler architecture increases Solana’s attractiveness to both developers and users, thus acting as an objective advantage.

Solana’s throughput fluctuates between 2,100 and 4,700 transactions per second, while the average transfer fee is $0.004. Ethereum processes no more than 26 operations per second, and an average transaction costs about $0.2. Accordingly, SOL’s mainnet is 131 times faster and about 50 times cheaper to use.

Fluctuations in the average transfer fee on Solana

Who is winning the competition: Ethereum or Solana?

The value of crypto assets locked on Ethereum reaches $74.77 billion, with the lion’s share concentrated in liquid staking, restaking, and staking-pool protocols such as Aave, Lido Finance, and EigenCloud. Daily trading volume on Ethereum-based decentralized exchanges exceeds $1.7 billion, and the value of futures-contract trades totals $1.3 billion over 24 hours.

Change in the value of assets locked on Ethereum

SOL’s blockchain trails ETH by more than eight times in terms of DeFi total value locked, which stands at only $9.16 billion, despite SOL’s higher staking yield. However, in decentralized-exchange turnover, reaching $4.38 billion, Solana surpasses its rival by two and a half times due to meme-coin trading. In futures trading volume, estimated at $1.18 billion, the SOL blockchain lags by 9%.

Fluctuations in the value locked on Solana

At the same time, Solana dominates the meme-coin market. Meme tokens issued on Solana accounted for 82.1% of trading volume over the last 30 days. BNB Smart Chain ranked second with 10.4%, while Ethereum came third with 5.6%.

Share of networks in meme-coin trading

Thus, competition between Ethereum and Solana is now largely nominal. The networks have taken their respective niches: ETH mainnet has become the king of DeFi, while SOL has become a haven for meme-coin creators and traders.

Should you move investments from Ethereum to Solana?

Over the past year, the value of assets locked on ETH increased by 8%, while meme-coin trading volume on Solana fell almost fourfold over the same period due to declining demand for meme tokens amid a series of scandals around pump-and-dump schemes carried out by meme-coin issuers.

Change in meme-coin trading volume on SOL (blue bars)

The bad news for Solana is that the meme-token market is in a bearish trend and is unlikely to return to the peak levels seen in October 2024. Meanwhile, decentralized services on Ethereum, on the contrary, are attracting capital—making it clear that Ethereum has greater long-term potential, and that there is no reason to get rid of ETH and invest the proceeds into SOL. With this in mind, Happy Coin News analyst Yuriy Savelyev would not be surprised if the reported hedge-fund capital rotation from Ethereum into Solana turns out to be a “canard” spread by crafty traders.

A direct confirmation that institutions prefer investing in Ethereum rather than Solana is the fact that crypto treasury companies invested 677% more money in ETH than in SOL. The value of ETH accumulated by public companies is estimated at $20.2 billion, while the value of SOL accumulated by firms is only $2.6 billion.

Editor: Yuliya Soroka

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