US Pro-Crypto Shift, Ethereum Internal Strife, and Solana Memecoin Surge Drive Divergent Market Trends

Executive Summary

The cryptocurrency market has experienced significant shifts driven by converging regulatory, developmental, and speculative forces. The new US administration has signaled a definitive pro-crypto stance through executive actions and key appointments, aiming to establish regulatory clarity and encourage innovation. Concurrently, the Ethereum ecosystem is navigating substantial internal divisions and strategic debates, leading to market underperformance relative to its peers. Meanwhile, the Solana network witnessed an extraordinary surge in activity, largely fueled by memecoin launches, which tested its infrastructure while demonstrating its capacity for high transaction volumes.

The Event in Detail: US Regulatory Shift

President Donald J. Trump signed an executive order titled "Strengthening American Leadership in Digital Financial Technology," which promotes self-custody, mining, and uncensored transactions. This order explicitly revokes the previous administration's crypto executive order and prohibits federal agencies from undertaking actions to establish central bank digital currencies (CBDCs). A Presidential Working Group on Digital Asset Markets has been established to develop a federal regulatory framework for digital assets, including stablecoins, and to evaluate a strategic national digital assets stockpile.

Key pro-crypto appointments reflect this policy shift. Caroline Pham was named Acting Chair of the CFTC, Travis Hill as Acting Chair of the FDIC, and Mark Uyeda as Acting Chairman of the SEC. Notably, Hester Peirce is leading a new SEC crypto task force aimed at creating a "sensible regulatory path."

Further solidifying this new direction, the SEC rescinded Staff Accounting Bulletin (SAB) No. 121. This rule previously required institutions to record client crypto assets as liabilities, creating operational and financial hurdles for banks offering custody services. Its rescission removes a significant barrier, paving the way for greater financial integration of cryptocurrencies by major banking institutions. This policy reversal is expected to accelerate institutional engagement in the digital asset sector, fostering a more robust and regulated market environment.

The Event in Detail: Ethereum's Internal Divisions

The Ethereum community is facing an "existential crisis," as highlighted by the "Mirror" report commissioned by the Ethereum Foundation from research group WE3. The report, based on over 60 interviews, identified eight distinct factions within the community and a lack of consensus on Ethereum's core identity and long-term vision. This internal strife is seen as a critical challenge to the protocol's future evolution and competitive standing.

Governance concerns have emerged, with discussions around potential conflicts of interest among insiders influencing protocol development. The Ethereum Foundation itself has undertaken structural changes, including committing 50,000 ETH, approximately $165 million, to DeFi protocols to replenish its treasury, which had reportedly shrunk by 39% over the past three years. These efforts aim to address internal struggles and policy adjustments.

Despite these efforts, ETH has consistently underperformed against BTC and SOL for approximately three years. The report also points to a "layer 2 conundrum," where the proliferation of Layer 2 (L2) solutions captures the value of block space, potentially contributing to "negative momentum" in the ETH price. Recent leadership changes saw Hsiao-Wei Wang and Tomasz Stańczak appointed as co-executive directors, with Aya Miyaguchi transitioning to president, in an attempt to enhance technical expertise and community engagement.

The Event in Detail: Solana's Memecoin Surge

The Solana network experienced unprecedented activity, largely driven by the launch of $TRUMP and $MELANIA memecoins by the Trump family. The $TRUMP memecoin surged from under $10 to a peak of $74.59. The subsequent launch of the $MELANIA token triggered a sharp reaction, causing $TRUMP to plummet by 50% at its lowest point, shedding $5 billion in market capitalization within 40 minutes.

This memecoin activity propelled Solana to record-breaking decentralized exchange (DEX) volumes, reaching $28.2 billion and $39.2 billion on January 19th and 20th, respectively. This peak day exceeded the previous all-time daily high across all blockchains combined, with over 10% of Solana's all-time cumulative volume occurring within the seven days surrounding the $TRUMP launch. By September 2025, Solana's DEXs recorded $1.21 trillion in cumulative volume, outpacing Ethereum ($400 billion) and BNB ($761 billion) combined, achieving over 50% DEX market share.

The surge, while demonstrating Solana's high transaction processing capacity (65,000 TPS) and sub-penny fees, also stressed the network. The Jito block engine API experienced degraded performance for over three hours, median priority fees jumped 5000x, non-vote transaction count fell 66%, and compute units per block fell 50%.

Market Implications

The shift in U.S. regulatory policy under the new administration is poised to significantly accelerate institutional capital flow and innovation within the country's digital asset sector. The rescission of SAB 121 explicitly removes a key financial impediment for traditional banks, fostering clearer pathways for corporate adoption of crypto-related services. This move positions the U.S. to potentially attract substantial investment and development in Web3 technologies, offering a more predictable operating environment compared to previous enforcement-heavy approaches.

Conversely, the internal debates and underperformance within the Ethereum ecosystem introduce considerable uncertainty for its future market positioning and investor sentiment. While leadership aims to balance scalability and decentralization, the "layer 2 conundrum" suggests that Ethereum's core asset, ETH, may continue to struggle against competitors like Solana without a clear resolution to its economic and governance challenges. Continued underperformance could lead to a further erosion of market share, particularly as other Layer 1s demonstrate superior transaction efficiency and lower costs.

Solana's experience with memecoin-driven activity underscores the dual nature of virality in the crypto market. While such events can generate immense network activity and revenue, as evidenced by its record DEX volumes and growing institutional interest—public companies now hold 5.9 million SOL in corporate treasuries—they also expose infrastructure vulnerabilities. The technical strain experienced during the Trump memecoin launches highlights the need for robust scaling solutions, even for high-throughput chains. Despite challenges like validator centralization and high user churn, Solana's ability to handle massive speculative volume positions it as a significant competitor in the Layer 1 landscape, appealing to users and institutions prioritizing speed and cost-efficiency.

Broader Context

The divergence in performance and sentiment across these major crypto narratives signals an evolving market structure. Regulatory tailwinds in the U.S. may foster a more mature and integrated financial ecosystem for digital assets, potentially drawing traditional finance deeper into crypto. Simultaneously, the internal struggles of a foundational blockchain like Ethereum and the spectacular, yet volatile, rise of memecoin activity on platforms like Solana illustrate the complex interplay of technological development, community governance, and speculative retail interest that continues to define the broader Web3 landscape.