Institutions Abandon Solana Over Security Concerns as Ethereum Gains High‑Value Activity
Solana’s network reliability is under renewed scrutiny after repeated outages and security concerns prompted institutional participants to prioritise Ethereum for high‑value activity. Joe Chalom, CEO of SharpLink, told Coinbase that Solana is “faster than secure,” arguing institutions require trust, liquidity and proven infrastructure for stablecoins and tokenized assets. Ethereum currently hosts over 65% of stablecoin activity and has tokenized assets roughly ten times larger than Solana. Market reaction has been modest: SOL traded near $121.81, down about 0.85% over 24 hours and 3.07% over the week. Traders remain cautious, with technical commentary pointing to consolidation and support near $118.85. Key takeaways for traders: institutional flows are favouring Ethereum (ETH) over Solana (SOL) due to security and downtime history; this dynamic may limit large capital inflows into Solana and increase volatility for SOL; watch on‑chain metrics, stablecoin distribution, and institutional announcements for directional cues.
Bearish
This article signals a bearish near‑term outlook for SOL. Institutional migration to Ethereum driven by security and downtime concerns reduces the likelihood of large, stable capital inflows into Solana — a key driver of sustained price appreciation. Historically, networks that suffered repeated outages (or perceived security weaknesses) saw reduced institutional activity and higher volatility (example: early-stage failures or major outages on layer‑1s leading to outflows and price pressure). In the short term, expect increased volatility, defensive selling by risk-averse holders, and restrained new institutional bids for SOL. In the medium to long term, SOL’s price path will depend on demonstrable uptime improvements, audited security enhancements, and any shifts in stablecoin or tokenization deployments back to Solana. Meanwhile, Ethereum stands to consolidate share of high‑value transactions, supporting ETH demand. Traders should monitor on‑chain metrics (transaction failures, active addresses), stablecoin issuance/location, institutional announcements, and liquidity metrics to time entries; risk management should be tightened given potential for episodic downside.