During the final week of January, Solana experienced a decline in comparison to Ethereum. Following the launch of the TRUMP memecoin, this altcoin retracted from $295 to around $220 in the market.
An analysis of the SOL/ETH ratio indicates that during this period, Solana’s decrease was more than 25% when measured against Ethereum. For those unfamiliar with this ratio, it tracks Solana’s performance relative to Ethereum and provides insights into the movement of capital between these two smart contract platforms.
Monitoring Trends in the SOL/ETH Ratio
Amid the TRUMP frenzy, Solana managed to outperform Ethereum by almost 50% in just two days. However, this short-lived hype surrounding TRUMP led to a downturn in Solana’s performance. Furthermore, concerns surrounding Chinese Deepseek AI and overvaluation issues within U.S. tech companies triggered a broader market decline that impacted both Solana and the entire cryptocurrency space.
Interestingly, Ethereum demonstrated more resilience in the face of the weak market sentiment compared to Solana. During the recent market dip, Solana lagged behind Ethereum by 25%.
It is worth highlighting that the decline also coincided with Solana’s rejection at the upper channel against Ethereum, a pattern that historically precedes a reversal. Currently, the pair is retracing towards crucial inflection points at the 50-day EMA (exponential moving average) and the lower channel thresholds.
If these levels hold, there is a chance that the pair could see a rebound at the lower support levels, indicating a potential recovery of Solana against Ethereum in the coming days.
Additionally, Solana has maintained a competitive stance against Ethereum in certain aspects, particularly after surpassing it for the first time in monthly revenue. In January, Solana generated $119 million in revenue, surpassing Ethereum’s $107.6 million.
However, despite Solana’s daily trading DEX volume reaching $35.9 billion post-TRUMP launch, the metric has now declined to $4.5 billion – marking an 87% decrease. The decrease in demand for SOL, as it serves as the primary token for gas fees in its DeFi ecosystem, has led to a significant drop of almost 90%, placing downward pressure on Solana’s price.
In essence, Solana’s resurgence may depend on a resurgence in trading volumes across various DEX platforms. On the price charts, the $220 price range remains critical in the short term and coincides with the 50-day EMA. A breach below this level could potentially drive Solana’s price towards $200 or lower.