Solana has shown a significant decline against Ethereum at the end of January, drawing attention to the SOL/ETH metrics.
SOL/ETH Ratio at Key Levels
During the TRUMP frenzy, SOL experienced growth against ETH by almost 50% in just two days; however, this was quickly followed by a slump. Together with concerns like Chinese Deepseek AI and issues with overvaluation among US tech firms, it led to a market downturn. ETH weathered weak market sentiment better, while SOL underperformed by 25%. Yet, this drop marked a rejection at the upper boundary of the SOL/ETH channel, which historically indicates a reversal. The pair approached key inflection points at the 50-day EMA and channel support lines. If SOL can hold at these levels, a rebound against ETH might be possible.
Solana's Position Against Ethereum
Despite the slump, Solana holds its position against Ethereum in various ways. In January, Solana surpassed Ethereum in monthly revenue for the first time, generating $119M compared to Ethereum's $107.6M. However, Solana’s daily trading DEX volume initially surged to $35.9 billion after TRUMP launch but fell sharply to $4.5 billion. This 87% drop reflects a decreased demand for SOL, the primary token for gas fees in its DeFi ecosystem. SOL’s recovery might only occur if DEX trading volumes increase.
Short-Term Outlook for Solana
The $220 price area is a vital short-term level for observation. This level coincides with the 50-day EMA. Should SOL fall below this point, it might drop to $200 or lower.
In the coming days, investors' focus will be on the $220 level for SOL and changes in trading volumes that might indicate shifts in Solana's position relative to Ethereum.
