Solana's Momentum Against Bitcoin Wanes Amidst Bearish Signals

Solana's momentum against Bitcoin has been a subject of intense scrutiny in recent weeks, with experts suggesting that the tide may be turning. As Solana faces increasing pressure, several key metrics are hinting at a potential bear market for SOL/BTC, reminiscent of the struggles Ethereum faced in its own battle with Bitcoin.

The SOL/BTC trading pair has seen a decline in recent weeks, indicative of broader market conditions. In fact, the data highlighted a clear downtrend since mid-January 2025, with the pair dropping from its high of 0.0024 BTC to its press time level near 0.0020 BTC. A hike in selling pressure and falling trading volumes have exacerbated the drop, signaling weaker demand relative to Bitcoin.

Historically, Solana has shown periods of strong outperformance against BTC. However, its current decline aligns with market corrections and fading momentum. The MFI, for instance, showed a recent uptick, alluding to a possible short-term recovery as buyers cautiously re-enter the market.

The data highlighted the relationship between the SOL/BTC pair's price and its Sharpe Ratio. Historically, peaks in the Sharpe Ratio align with price surges, as seen in mid-2021 and mid-2023. However, sharp declines in this ratio often signal heightened volatility and risk – Coinciding with price downturns. At the time of writing, the Sharpe Ratio was hovering near neutral or negative territory, reflecting diminished risk-adjusted performance for SOL relative to Bitcoin. This seemed to be in line with the recent price weakness, pointing to market hesitation and investors' caution about allocating heavily to SOL during uncertain periods.

The Normalized Risk Metric offers a more nuanced perspective. The NRM oscillates within a gradient band, with higher values in red indicating elevated risk and lower values in blue signaling reduced risk levels. Historically, price peaks coincide with elevated NRM levels, as seen in mid-2021, suggesting overbought conditions and heightened market euphoria. Conversely, dips into the lower bands have marked accumulation phases, such as early 2023, signaling reduced market risk. Currently, the NRM is hovering in the mid-band, reflecting a more cautious equilibrium. This means that the market is neither overly exuberant nor fearful, hinting at a consolidation phase for SOL relative to Bitcoin.