Solana hype bubble coming? Traders reveal 3 reasons: Why short SOL?
I opened a short position at ~$235-240 and thought it was the last great asymmetric opportunity this year. However, it should be noted that I also hold short positions in other assets (such as Bitcoin, because the gap between Saylor's purchase price and the ETF is still widening; I also think that if Ethereum falls, its downward trend may continue longer).
In summary, Solana's performance this year has not been truly tested for the most part, and its main driving force is running out (or is in the process of running out).
Why will SOL perform poorly?
In my opinion, the real factors that have driven Solana's performance this year to become the best YTD performer among scaled assets include the following:
A more active and diverse ecosystem than competitors with fast transaction speeds
The strongest "casino" environment, attracting many meme participants willing to use $SOL as a unit of account;
Mid-year capital inflows - I think many fund managers and large liquidity participants have been squeezed out by the lack of Ethereum ETF enthusiasm and have experienced a degree of "existential crisis" in future asset allocation.
Today, I believe that all three of the above drivers have weakened and are extremely vulnerable to shocks, and there is still a lot of excess froth to be cut.
Here are my specific reasons:
As a dominant L1 with speed and diversity as its main feature, Solana is facing strong threats from HYPE and Ethereum/Base
The rise of these threats was unexpected and has not been effectively addressed.
The figure below shows Artemis flow data, you can choose to observe it by 1 week or 1 month time frame. This is the most significant shift in Solana’s capital flow to the EVM so far this year, and this shift is not just reflected in the flow.
We can also observe from popular industry cases, such as the meme coin sector of the AI industry - $GOAT, $FARTCOIN, $ZEREBRO and $AI16Z, which were previously considered top projects, have all shrunk in value by half during this period, while $VIRTUAL and the proxy ecosystem have flourished during the same period.
