The SOL/ETH ratio has dropped to a 3-month low as the speculation surrounding an ether ETF continues to impact altcoins like Solana’s SOL token. The decline in the ratio, currently at 0.038 on Binance, marks a 35% decrease since March 13, signaling a bearish trend ahead, according to analyst Josh Olszewicz.
Olszewicz pointed out key bearish indicators on the technical chart, such as the penetration of the Ichimoku cloud support. The Ichimoku Cloud, created by Japanese journalist Goichi Hosada, helps identify broader trends in the market. In the case of SOL/ETH, crossovers below the cloud indicate a bearish shift in the market trend.
Additionally, the failure of the ascending triangle pattern on the SOL/ETH chart suggests a bearish trend change. This pattern typically indicates an upward trend, but the pair has broken below the support line, signaling a reversal.
Despite the downward trend, Olszewicz mentioned that temporary recovery rallies may occur if there are outflows from the Grayscale Ethereum Trust. Similar to the outflows seen in the Grayscale Bitcoin Trust following the launch of spot bitcoin ETFs in the U.S., the ether market could experience a similar dynamic when spot ETFs debut in July.
Looking ahead, Olszewicz noted that SOL may attract investors if BlackRock applies to launch an ETF tied to SOL. However, he believes that this scenario is unlikely and that the SOL/ETH ratio is likely to continue declining if the ether ETF is successful.
In conclusion, the current bearish trend in the SOL/ETH ratio is driven by the speculation surrounding an ether ETF. While there may be temporary recovery rallies, the outlook remains negative unless there are significant developments like the launch of an ETF tied to SOL. Investors should closely monitor these factors to make informed decisions in the volatile crypto market.