Solana’s native token, SOL, has failed to sustain levels above $200, aligning with the broader cryptocurrency market’s 3.5% decline over two days. However, SOL underperformed with a 5.1% correction, raising concerns among traders about potential further price declines.
Declining On-Chain Activity Raises Concerns
Solana’s on-chain network volumes dropped by 30% over seven days, with the blockchain ranking second in weekly volumes with $20.9 billion. Despite this, Solana performed the worst among the top 10 blockchains, with Ethereum’s on-chain volumes falling by 15% and Sui experiencing an 8% decline.
Memecoins and DApp Volumes Decline
Solana’s weekly DApp volumes reflected negative trends, with a 39% decline in activity for Orca and Phoenix, and a 30% drop in Raydium activity. Memecoins on Solana, which have been a significant draw for new users, posted poor 30-day performance, with Popcat falling 42%, Dogwifhat declining 40%, and BONK dropping 25%.
Total Deposits Reach Two-Year High
Total deposits on the Solana network, as measured by total value locked (TVL), reached a two-year high of 44 million SOL, driven by platforms such as Binance Staked SOL, Jupiter, Drift, and Orca.
Derivatives Market Signals Resilience
Despite the price decline, the derivatives market has shown resilience, with SOL futures signals indicating a neutral-to-bullish sentiment. The current 10% premium is at the threshold of neutral-to-bullish sentiment, considering SOL’s 16% price decline during the same period.
Retail Traders’ Sentiment Turns Negative
However, the SOL funding rate turned negative on Dec. 27, signaling reduced demand from leveraged longs (buyers). This shift is concerning, given that SOL has declined 30% since its all-time high of $264.50 on Nov. 20.
Moderately Bearish Outlook
The sharp drop in Solana’s on-chain activity and declining interest in memecoins suggest a moderately bearish outlook for SOL’s short-term price. Despite this, derivatives data indicate that whales and market makers remain optimistic, suggesting limited downside risk below $180.
Source: Cointelegraph.com
