Surging SOL/ETH Price Ratio: What Does it Signify?

SOL has surpassed ETH in performance for the first time in two years.

The SOL/ETH price ratio has experienced a continuous rise since September.Demand for SOL has remained strong among daily traders, making Solana (SOL) a surprising leader in the 2023 altcoin market. It has significantly outperformed Ethereum (ETH) since the beginning of autumn.

Notably, the SOL/ETH price ratio reversed its trend in early September, marking the first time this has occurred since 2021.

Source: Kaiko

The SOL/ETH ratio, which gauges the value of one SOL coin relative to one ETH coin, has experienced a significant shift, highlighting Solana's growing strength in recent months.

This trend has been further substantiated by the substantial increase in investments in Solana-based products, surpassing their Ethereum counterparts in recent times.

As reported by digital asset investment research firm CoinShares, as of December 16th, year-to-date fund flows into Solana products have resulted in a net positive of $156 million. In contrast, Ethereum's fund flows amounted to just $15 million for the year, mainly characterized by weekly outflows from digital assets backed by the leading altcoin.

SOL remains strong

At the time of this writing, SOL was trading at $75.92. Over the past two months, it has experienced an impressive price rally, resulting in a year-over-year increase of over 500%.

Notably, coin accumulation remains robust, with the 50-day simple moving average positioned above the 200-day moving average since October. This alignment is often regarded as a sign of market strength, commonly referred to as the 'golden cross,' which occurs when a short-term SMA surpasses a long-term SMA.

Despite a slight reduction in overall coin accumulation across the market, SOL continues to demonstrate a stronger selling pressure compared to sell-offs on a daily chart.

As of the present moment, SOL's Relative Strength Index (RSI) stands at 62.88, while the Money Flow Index (MFI) registers at 69.96. These values indicate a preference among SOL traders for coin accumulation.

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Additionally, as of the latest data available, SOL's Chaikin Money Flow (CMF) has maintained a position above the zero line. Apart from a minor dip observed at the close of November and early December, SOL's CMF has consistently stayed in positive territory since October.

Currently, the SOL market maintains a healthy liquidity supply, with a CMF reading of 0.05 at the time of writing.

Source: SOL/USDT on TradingView


Dec 21, 2023

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