The cryptocurrency market has seen significant declines since its peak last December, but some digital assets have shown relative stability compared to others. According to an analysis by Glassnode, Solana has shown greater resilience to hot capital flows than Bitcoin and Ethereum.
Solana Shows More Resistance Against Pullbacks
Glassnode has revealed that Solana has recently shown greater resilience to pullbacks than Bitcoin (BTC) and Ethereum (ETH), according to a key market indicator.
Hot Capital Flows: A Measure of Liquidity Movement
Glassnode based its analysis on the Hot Capital Index, a metric that measures new capital flowing into a cryptocurrency over two time periods: 24 hours and one week.
This analysis is based on the concept of “Realized Cap,” which calculates the actual value of cryptocurrencies based on the last price traded on the blockchain, rather than relying on traditional market value.
In other words, this indicator reflects the total capital that investors in the network have used to purchase their cryptocurrencies, unlike the traditional market cap that shows the current value of the assets held.
Thus, the realized market value of the younger age groups (24 hours and 1 day to 1 week) provides an idea of the amount of new capital flowing into the market.
When hot capital rises, it indicates increased demand for the cryptocurrency, reflecting renewed interest from investors, and may signal the beginning of an uptrend. If hot capital starts to decline, it may indicate a decline in investor confidence in the asset, which could lead to a price correction or a downtrend.
Solana records more stable performance
Data posted on Twitter by Glassnode showed that Bitcoin and Ethereum have seen a sharp decline in hot capital inflows since December. New demand for Ethereum has fallen by 52%, while Bitcoin has seen a sharper decline of 77%.
These declines reflect a slump in investment momentum since the peaks recorded in December, raising doubts about the ability of these currencies to recover in the near future.
Despite the overall decline in hot capital inflows, Solana has proven its ability to retain a significant portion of new capital. In December, the total capital generated for the 24-hour and 1-week categories was $15.8 billion, and with demand waning, this value has stabilized at $11.8 billion, a drop of only 25% compared to the sharp declines in Bitcoin and Ethereum.
Solana's Future in Light of Weak Competitors
This performance suggests that Solana may be more attractive to investors at the moment, perhaps due to market confidence in its robust infrastructure and network speed compared to its main competitors.
The big question remains whether this resilience in capital flows will be reflected in Solana’s price performance in the near future. As Bitcoin and Ethereum continue to decline, investors may find Solana a more stable option, strengthening its position in the market.
