Traders are paying attention to the potential reversal of the SOL/ETH ratio as a series of meme coin scandals have shaken sentiment on the Solana network.
After reaching a peak of over 0.08 SOL per ETH, the SOL/ETH ratio reversed on February 15th, dropping to around 0.06 SOL/ETH by February 19th, according to TradingView data.
"Solana was the best chain for retail investors to access, but the Solana narrative has now become tied to fraud and insider trading, which will take time to repair," Andy - co-founder of Rollup Ventures commented in a post on X platform on February 17th.
Meanwhile, "Ethereum is ready for mass adoption. The tide is turning," Andy added, also stating that the SOL/ETH ratio is an indicator of the changing market sentiment.
Since mid-2023, SOL has significantly outperformed ETH, with the SOL/ETH ratio increasing more than 10-fold during this period, according to TradingView data.
The strong growth of Solana - its Total Value Locked (TVL) has grown from around $1.4 billion to over $9 billion in 2024 according to defillama data - has been largely driven by meme coin trading.
On February 14th, LIBRA, a meme coin seemingly endorsed by Argentine President Javier Milei, wiped out around $4.4 billion in market capitalization just hours after its launch.
In the past 48 hours, the fallout from this event has contributed to a more than 15% drop in the SOL price.
Now, traders are examining the role of popular Solana applications, such as Meteora, in the context of LIBRA's ill-fated launch.
In a post on X on February 17th, investor Beanie at Gm Capital investment firm claimed that the Solana-based decentralized exchange (DEX) Meteora "is self-snipping its own token." Snipping typically refers to buying tokens early and then selling them quickly to realize quick profits.
"This sounds almost unbelievable. As the platform has made over $300 million in the past month and $40 million just on the day of Libra's launch from transaction fees. But that's what's happening," Beanie stated in the post.
Overall, "the trash that is now surfacing is really damaging the SOL ecosystem," anonymous trader Runner XBT said in a post on X on February 16th.
The spot price of ETH has struggled since March 2024, when the Dencun network upgrade reduced transaction fees by around 95%.
"There is not enough trading volume to offset the fee decline, so investors have become more pessimistic about the chain," Matthew Sigel, an analyst at asset management firm VanEck, said in September.
Currently, ETH is recovering relatively strongly. It has gained nearly 30% in February, rebounding from a local low of around $2,150.
Since March 2024, data posted to Ethereum by layer-2s has tripled, helping to increase fee revenue for the mainnet, according to data from dune analytics.
Ethereum has also benefited from strong development activity in areas such as real-world assets (RWA) and autonomous artificial intelligence.
Regarding AI development, "many people think it's mostly happening on Solana. In reality, a lot of it is happening in the ETH ecosystem," Matt Hougan, research chief at asset manager Bitwise, said in December.
Disclaimer: This article is for informational purposes only and not investment advice. Investors should do their own research before making decisions. We are not responsible for your investment decisions.
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Dinh Dinh
