As July begins, the uncertainty around the geopolitical tension between Israel and Iran and shifting investor sentiment are weighing heavily on crypto markets.
With the US’s deepening involvement in the Israel-Iran conflict, risk appetite has noticeably declined, and altcoins like Solana are feeling the pressure.
SOL/BTC Ratio Crashes 90%—What It Means for Solana in July
A key indicator flashing warning signals is the SOL/BTC ratio, which declined for most of June before initiating a rebound in the final week of the month.
The SOL/BTC ratio measures Solana’s performance relative to that of Bitcoin (BTC). When the ratio rises, it indicates that SOL is outperforming BTC. Conversely, when it falls, it signals that SOL is losing value compared to BTC, reflecting a shift from riskier altcoins.
Between June 1 and June 27, the SOL/BTC ratio fell by 90% to reach 0.00013. The drop showed Solana’s price action weakened relative to BTC as market sentiment dropped for most of the month.
While it has rebounded over the past week, indicating that SOL’s price has gained, the climbing market volatility still puts it at risk, especially as traders continue to seek safety.
SOL Faces Liquidity Crunch as Risk Appetite Fades
In an exclusive interview with BeInCrypto, Martins Benkitis, Co-Founder and CEO of Gravity Team, confirmed that SOL continues to underperform majors like BTC and ETH. Its price action is likely to remain pressured as risk appetite continues to weaken.
“It’s not catastrophic, but it’s noisy and telling. SOL/BTC has broken short-term support zones we’ve been tracking since May. BTC dominance ticked up, and SOL’s beta works against it in these environments. Price correlation metrices show SOL increasingly lagging behind majors,” Benkitis stated.
When asked about the current appetite for risk-on assets like SOL compared to majors such as BTC and ETH, Benkitis explained that market flows are firmly favoring the majors right now.
“As we know, flows favour majors right now. We’re seeing tighter spreads and deeper liquidity in BTC/ETH, while SOL books are thinner and wider. Passive market makers are pulling depth, and high-frequency players are hedging more aggressively. Risk-on appetite is muted and SOL demand is downshifted,” Benkitis said
The shift in stablecoin liquidity across networks further reinforces Benkitis’s position. According to DefiLlama, stablecoin liquidity on the Ethereum network has increased by 2% over the past month, reaching $125 billion at press time.
In contrast, stablecoin liquidity on Solana has dropped by 9% over the same period, highlighting the decline in trading activity on the network.
Stablecoins represent the primary source of trading capital in decentralized finance (DeFI) and on-chain markets. When liquidity falls like this, traders and capital providers are withdrawing funds to reduce risk exposure.
For Solana, the 9% drop in stablecoin liquidity means there is now less capital circulating within its ecosystem to support general market activity. This could pressure SOL’s price in July, as reduced liquidity makes the asset more vulnerable to sharper price swings and weaker upside momentum.
RSI Nears Breakdown as Price Risks Mount
On the daily chart, SOL’s falling Relative Strength Index (RSI) confirms the likelihood of further price troubles in July. As of this writing, this key momentum indicator sits at 50.27, poised to break below the neutral line.
The RSI indicator measures an asset’s overbought and oversold market conditions. It ranges between 0 and 100. Values above 70 suggest that the asset is overbought and due for a price decline, while values under 30 indicate that the asset is oversold and may witness a rebound.
If SOL’s RSI successfully holds above the neutral threshold, it could signal a shift toward renewed buying pressure and push the coin’s price toward $158.80.
However, given the declining liquidity and risk-off sentiment among SOL holders, its price could break below $148.81 to $142.59.
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Disclaimer
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