SOL/ETH is at all-time highs despite recent Ethereum ETF.
The SOL/ETH ratio hit new highs this week, with SOL leading the market’s relief rally.
SOL is up 33% to $147 from Sunday’s low of $110, compared to 12% for BTC and 8% for ETH. The strong rebound has also propelled the SOL/ETH ratio to a new all-time high of 0.062, up more than 800% from the lows reached in December 2023 after the FTX collapse.
Due to the price surge, Solana’s total value locked (TVL) is up 10% over the month, while Ethereum’s is down 14% and Tron, the chain with the second-highest TVL, remains relatively flat.
Solana DeFi
As Solana continues to gain more attention, its DeFi ecosystem is following suit.
Jito, a liquid and MEV staking product on Solana, is its leading DeFi protocol, with $192 million in annualized revenue and $1.74 billion in TVL, up 168% from January 1.
Solana’s leading decentralized exchange (DEX) Raydium toppled former leader Jupiter in March, largely thanks to the success of memecoin launchpad Pump.Fun.
Tokens launched on Pump.Fun have their liquidity burned by Raydium if they reach a market cap threshold. Given the popularity of memecoins on Solana, Raydium’s TVL has grown rapidly as a result.
While Solana’s DeFi ecosystem is evolving alongside the value of the chain’s token, it remains dwarfed by Ethereum’s DeFi. Ethereum’s leading liquid staking solution, Lido, boasts a staggering $24 billion in TVL, and Uniswap’s $5.5 billion in volume last month is more than four times Raydium’s $1.28 billion.
Ethereum’s underperformance
ETH has been notoriously slow to move throughout 2024. ETH is up just 4.36% since the start of 2024, compared to 32% for BTC and 45% for SOL.
During the first and second quarters, many analysts predicted that Ethereum ETFs would be the catalyst that could push ETH price to catch up with other major coins. However, since the ETFs launched on July 23, the price has been held back by massive selloffs from entities such as Grayscale and Jump Trading, which is impacting investor sentiment.
In total, the ETFs generated net outflows of $364 million, the opposite effect of what many optimists expected when the funds were approved.
Despite the extremely negative sentiment, ETH ETF flows this week are positive, with a total of $147.2 million in inflows according to Farside Investors, which may indicate that a bottom is forming in the asset.
Meanwhile, VanEck’s application to issue a Solana ETF is still awaiting approval.
