Glassnode, a reputable on-chain analytics firm, has identified why Solana (SOL) has been underperforming compared to Bitcoin (BTC) and Ethereum (https://yellow.com/asset/eth). According to Glassnode, Solana's realized capitalization growth has recently decelerated, impacting its performance. During the final quarter of 2024, Solana had consistently outperformed both Ethereum and Bitcoin. However, as December commenced, Ethereum emerged as the frontrunner, surpassing its competitors.

Currently, Bitcoin has risen by approximately 18% over the past month, with Ethereum climbing 28% while Solana has grown just 3%. This marks a significant shift as Solana, once the leader, now trails behind.

What has prompted this shift? Glassnode suggests the answer lies in capital flows observed in these cryptocurrencies. To estimate these flows, the firm utilized the Realized Cap indicator. This model calculates a digital asset's total value by considering the price at which tokens last transacted on the blockchain. Essentially, the Realized Cap reflects the cost basis of all circulating coins, representing the total invested capital.

These changes in Realized Cap indicate capital movements either into or out of the asset. As depicted in Glassnode’s shared chart, between September and early December, Solana experienced positive growth in this metric. Although both Bitcoin and Ethereum also saw capital inflows, Solana's growth was remarkably more rapid.

This month, however, market dynamics have shifted. Bitcoin and Ethereum have overtaken Solana due to their increasing capital inflows. The earlier inflows propelled Solana’s initial outperformance; their cessation helped Bitcoin and Ethereum dominate the market.

In terms of SOL’s price, unlike Bitcoin and Ethereum which have surged recently, Solana’s price remains stagnant, trading steadily around $215.