Solana (SOL) retraced significantly after the TRUMP memecoin launch, but a potential rebound at key support levels could signal a return to bullish momentum against Ethereum.
Solana (SOL) experienced a significant price correction in the last week of January, retracing most of its gains following the launch of the TRUMP memecoin. The altcoin dropped from a high of $295 to nearly $220. The SOL/ETH ratio, which tracks SOL's relative performance to Ethereum (ETH), shed light on this trend. During the TRUMP frenzy, SOL outperformed ETH by almost 50% in just two days. However, the hype quickly subsided, dragging SOL down.
This downturn coincided with broader market fears stemming from Chinese Deepseek AI and overvaluation concerns among US tech firms. Interestingly, ETH weathered the negative sentiment better than SOL, underperforming by only 25% during the recent market dip. Despite the correction, the drop marked a rejection of SOL/ETH at the upper channel, historically leading to reversals. The pair has since retreated towards crucial inflection points at the 50-day EMA and channel lows. If the channel holds, a rebound at these lower support levels could signal a potential recovery for SOL against ETH in the coming days. Solana has maintained its position against Ethereum in some areas, particularly after briefly surpassing it. However, after reaching a peak daily trading DEX volume of $35.9 billion following TRUMP's launch, the metric plummeted to $4.5 billion at press time, a staggering 87% drop. This indicates a 90% decrease in demand for SOL, the primary token for gas fees within its DeFi ecosystem. This weakened demand also contributed to SOL's price decline. Therefore, a rebound for SOL is likely contingent on an increase in trading volumes across its DEX platforms. The $220 level remains a critical short-term support level to monitor. It has also been serving as the 50-day EMA. A breach below this level could potentially push SOL down to $200 or lower.
Solana SOL Ethereum ETH TRUMP Memecoin DEX Volume Price Correction Market Sentiment Crypto Market
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