Ethereum Beats Solana in Capital Inflows: $4K Target in Sight

Ether has outpaced Solana and Bitcoin in capital inflows and futures dominance, signaling a potential retest of the $4,000 price level.

Capital Flows Favor Ethereum Over Solana

Ethereum (ETH) has emerged as the primary beneficiary of capital rotation within the altcoin market. According to Glassnode, the SOL/ETH Hot Capital Ratio—a metric measuring short-term realized capital movement—has dropped to a year-to-date low of 0.045, marking a 42% decline since April. This suggests that while both ETH and SOL saw inflows in July, capital flow is now favoring Ether. The Hot Realized Cap metric reflects which asset short-term speculators prefer. With the ETH/SOL trading pair in a multimonth downtrend, data indicates a "fading but notable ETH-led rotation," according to Glassnode. Another bullish indicator is the ETH/BTC pair, which recently rose above the 200-day exponential moving average for the first time in over two years, reaching multimonth highs. This contrasts with Bitcoin, which continues to face heavy selling pressure below $116,000.

Ether Funding Rates Remain Low Amid Growing Open Interest

Ether's open interest (OI) recently hit an all-time high of $58 billion, reflecting increased market participation and capital inflows. Ethereum’s share of total open interest across major exchanges climbed to 34.8%, while Bitcoin’s share declined from 59.3% to 47.1%. Despite not yet reclaiming the key $4,000 resistance, futures funding rates suggest the rally has room to run. Current aggregated funding rates are significantly lower than during previous attempts to breach $4,000 in March and December 2024, nearly halving since March. Lower funding rates are bullish for two reasons: they indicate traders are not excessively leveraged on the long side, reducing liquidation risk, and they suggest the price action is driven more by spot demand—led by Ether treasury companies—rather than speculative positioning. NovaDius president Nate Geraci highlights that "Eth treasury companies & spot eth ETFs have each bought approx 1.6% of current total eth supply since beginning of June."

$4,000 Price Level in Focus

Ether price corrected by 9.72% over the past week after five consecutive weeks of rallying but has since recovered 9%, retesting $3,800. Crypto analyst Jelle notes that the $4,000 psychological level "has been resistance since forever," adding:

"Once it breaks, I doubt we go back below anytime soon. Price discovery is close."

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making decisions.

Source: Originally published at Cointelegraph on Thu, 07 Aug 2025 13:23:56 GMT.

Frequently Asked Questions (FAQ)

Ethereum vs. Solana Capital Flows

Q: What is the current trend in capital inflows between Ethereum and Solana? A: Recent data indicates that capital inflows are favoring Ethereum (ETH) over Solana (SOL), with the SOL/ETH Hot Capital Ratio dropping to a year-to-date low. Q: What does the SOL/ETH Hot Capital Ratio signify? A: This ratio measures the movement of capital by short-term speculators, suggesting that ETH is currently the preferred asset for such investors compared to SOL. Q: Are there other indicators suggesting Ethereum's strength? A: Yes, the ETH/BTC trading pair recently broke above the 200-day exponential moving average for the first time in over two years, further signaling strength in Ethereum relative to Bitcoin.

Ether's Market Performance and Open Interest

Q: What is the significance of Ether's rising open interest? A: Ether's open interest (OI) reaching an all-time high of $58 billion signifies increased market participation and capital inflow into Ethereum-based futures. Q: How does Ethereum's open interest compare to Bitcoin's? A: Ethereum's share of total open interest across major exchanges has increased, while Bitcoin's share has seen a decline, indicating a shift in market dominance. Q: What do Ether's funding rates suggest about its price rally? A: The current low funding rates, significantly lower than in previous rallies, suggest that Ether's price action is more driven by genuine spot demand rather than excessive speculative leverage, which is a bullish sign. Q: Who are the major buyers of Ether recently? A: "Eth treasury companies & spot eth ETFs have each bought approx 1.6% of current total eth supply since beginning of June," according to NovaDius president Nate Geraci.

Price Targets and Market Sentiment

Q: What is the key price level Ethereum is aiming for? A: Ether is currently focused on retesting the $4,000 price level, which has historically acted as a significant resistance. Q: What is the outlook for Ethereum breaking the $4,000 resistance? A: Analysts suggest that once Ethereum breaks through the $4,000 resistance, it is unlikely to fall back below it soon, indicating a potential for significant price discovery.

Crypto Market AI's Take

The strong capital inflows into Ethereum, as detailed in this analysis, highlight a growing institutional and speculative interest in the second-largest cryptocurrency. This trend aligns with our platform's focus on leveraging AI for market intelligence and trading. Our AI-powered trading bots and analytical tools are designed to identify such shifts in capital flow and market sentiment, enabling users to make more informed decisions. As Ether approaches key resistance levels like $4,000, understanding these underlying market dynamics, as presented in this article, is crucial for navigating potential price movements effectively.

Ethereum beats Solana in capital inflows: K target in sight