Solana-Ether Ratio Hits 3-Month Low, Analyst Anticipates Further Losses

As an experienced analyst, I’ve been closely monitoring the cryptocurrency market and have noticed a significant shift in the SOL/ETH ratio. The ether (ETH) ETF narrative has taken center stage, leading to a sizable outflow of funds from altcoins like Solana’s SOL token, causing their prices to slide relative to ETH.Around a month ago, CoinDesk explored the possibility that investing in a spot ether Exchange-Traded Fund (ETF) could lead to funds shifting from alternative tokens like Solana’s SOL, towards ether.

Since then, the market behavior has been in line with anticipations, resulting in a significant decrease of approximately 35% in the SOL to ETH dollar value ratio on Binance, reaching a record low of 0.038 as observed through TradingView’s charting analysis.

“Olszewicz remarked on X that SOL/ETH was showing signs of a downturn. He pointed out several bearish indicators on the technical chart, including the breach of the Ichimoku cloud’s supporting level.”

Goichi Hosada, a Japanese journalist, introduced the Ichimoku Cloud chart in the late 1960s. This technical analysis tool consists of five distinct lines: Leading Span A, Leading Span B, Conversion Line (Tenkan-Sen or T), Base Line (Kijun-Sen or K), and a lagging closing price line. The space between Leading Span A and B forms the cloud. Traders use this cloud to discern larger trend movements.

Crossovers below the cloud, as in SOL/ETH‘s case, represent a bearish shift in the market trend.

The graph for SOL/ETH reveals a broken trend known as an ascending triangle, characterized by a gradually rising support level and a flat resistance line that typically signals bullishness. However, in this instance, the resistance line has failed to hold, resulting in a potential bearish reversal.

As a crypto investor, I’ve noticed that an ascending triangle formation occurs when buying pressure is strong and tends to continue the existing uptrend. However, my observation of the SOL/ETH pair reveals that it has dropped below the support line of the ascending triangle. This bearish development suggests a potential shift in trend.

As an analyst, I believe that the Ethereum pair may experience brief recoveries despite the overall downward trend if funds are withdrawn from the Grayscale Ethereum Trust.

In the month after the launch of bitcoin spot ETFs in the United States, the Grayscale Bitcoin Trust ETF experienced $6.5 billion in withdrawals, which was compensated by significant investments into other funds. It is anticipated that a similar trend may occur in the ether market upon the expected introduction of spot ETFs in July, potentially curbing ethereum’s price growth.

Lastly, according to Olszewicz, there’s a possibility that SOL may gain popularity if BlackRock proposes creating an Exchange-Traded Fund (ETF) linked to it. However, Olszewicz expresses skepticism about BlackRock taking this step.

As a researcher, I’m keeping an eye on the following developments: I’m on the lookout for significant ETHE outflows that could momentarily drive this pair upwards. However, if Larry SOL ETF gets approved for application, it’s unlikely that we’ll see any substantial change in the pair’s direction. Instead, the Ethereum price is expected to continue declining should the Ethereum ETF be successful.