- The SOL/ETH ratio has dropped to a six-week low of 0.058 as Ethereum outperforms Solana.
- Solana has been stuck in consolidation due to a lack of fresh buying activity.
Solana [SOL] was trading at $233, at press time, after a slight 1.5% drop in the past 24 hours. The altcoin has been underperforming, as it was the only coin among the top ten largest cryptos by market capitalization with a seven-day loss.
Solana’s underwhelming performance has failed to mirror gains across the broader altcoin market and has led to SOL falling to a six-week low against the largest altcoin, Ethereum [ETH].
At the time of writing, the SOL/ETH ratio had fallen to 0.606 after bouncing from support at 0.058 on the four-hour chart.
This decline showed that Ethereum was outpacing Solana in terms of gains. The declining ratio follows the formation of a bearish head-and-shoulders pattern.
Source: TradingView
The bearish trend has pushed SOL/ETH to a support level of 0.058. The last time SOL tested this support was in late October before starting a rally. Whether this trend will repeat depends on buying activity around Solana.
Solana price stuck in consolidation as buying pressure wanes
Solana has been consolidating between $225 and $243 over the past week. The volume histogram bars also shrunk, showing a lack of strong trading activity to push SOL out of the range-bound trading pattern.
Buying activity remained scarce, as indicated by the falling Chaikin Money Flow (CMF), which has been making lower lows.
At the same time, the Relative Strength Index (RSI) was on a downtrend. Despite staying above 50, the RSI indicates that selling activity is rising amid low demand to absorb the sold coins.
Source: TradingView
Solana could succumb to bearish trends and experience a downward breakout due to continuous selling by the meme coin launchpad Pump.fun.
According to Lookonchain, Pump.fun recently transferred 100,000 SOL, valued at $23.45 million, to the Kraken exchange. Since its launch, the platform has deposited $265 million worth of SOL to exchanges for selling.
If buyers do not step in to absorb these sold coins, SOL could continue to underperform against Ethereum and other altcoins.
Long/Short Ratio shows a bearish sentiment
Solana’s Long/Short Ratio further shows that the market sentiment around SOL is bearish after dropping to 0.89.
Read Solana’s [SOL] Price Prediction 2024–2025
This indicates that a majority of traders have taken leveraged short positions on the altcoin and are anticipating a further decline.
Source: Coinglass
However, an influx of short positions increases the risk of a short squeeze. Therefore, traders should watch out for an unexpected price gain that could cause a cascade of short liquidations and push the price higher.
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