Solana Native Token, Sol (Sol) rose 17% after falling to a low of $125 on February 28th. However, strong resistance occurred near $180. More importantly, the current $145 price falls 50% from its all-time high of $295 on January 19, raising concerns among traders about its ability to regain bullish momentum.
Analysts attribute the sharp decline in SOL’s value to a conflict in the Memecoin market, but Onchain activity has declined in a variety of sectors, including liquid staking, tokenized assets, yield aggregators, synthetic perpetuals, NFT marketplaces and artificial intelligence infrastructure.
Solana 7-day blockchain fees, USD. Source: Defilama
Defillama data suggests that the decline in blockchain activity is a decrease in SOL’s appetite, with SolANA network fees down 73% compared to four weeks ago. The surge in activity was driven primarily by launching Memecoin tokens and decentralized exchange (DEX) transactions, but the outcome of Sol’s decline momentum remains the same.
According to Dappradar data, the number of active addresses interacting with Jito, Solana’s largest liquid staking distributed application, has dropped by 56% over the past 30 days. Similarly, NFT Marketplace Magic Eden saw a 38% decrease in active addresses, while Subsidy Lending Save (formerly Solend) saw a 42% decrease in users over the same period.
In comparison, the number of active addresses on the base, the number of Ethereum Layer-2 blockchains, fell by just 2% over the same period. Even the basic layer of Ethereum surpassed Solana, with the number of addresses engaged in Dapps down 17% over 30 days. This suggests that only the Memecoin Bubble Burst was attributed to Memecoin Bubble Burst, as other networks did not experience similar results.
Low leverage demand, bots and Trump shortages limit Sol’s rise
Another factor limiting the benefits of Sol is the lack of interest from leveraged traders. Sol Perpetual Futures’ funding rate has been negative for the past three days. That is, the shorts (seller) are paying to keep the position open.
Sol Perpetual Futures 8-hour funding rate. Source: Coinglass
The current negative 0.01% 8-hour funding rate is not particularly concerning as it leads to a cost of just 0.9% per month. However, the lack of interest from leverage buyers after continuing to drop 52% from an all-time high is not a positive indication of trader sentiment. Meanwhile, unexpected news such as the potential approval of the US Solana Spot Exchange-Traded Fund (ETF) can surprise traders and cause short-term rallies.
For some critics, the possibility of increasing activity in the Solana network is not a concern. They argue that the story surrounding Solana is misleading. This is driven primarily by WinterMute, market production companies, and Maximum Extractable Value (MEV) bots, as it is reportedly 95% of the network’s fees come from just 1.3% of users.
sauce: arndxt_xo
In short, according to Arndxt, author of the Threading on the Edge newsletter, “small user groups” of “mainly predatory, mostly predatory traders” benefited. Arndxt claims that Memecoin’s speculation led to a sandwich attack.
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Part of the reason Sol couldn’t regain the $180 level is tied to World Liberty Financial, a semi-federal financial application related to President Donald Trump’s private investment. The project reportedly accumulated locations in Ether (ETH), wrapped Bitcoin (WBTC), Tron (TRX), Chain Link (Link), AAVE (AAVE) and other cryptocurrency, but despite the launch of official Trump (Trump) members on the Solna Network, it is not found in SOL.
Therefore, for SOL to regain bullish momentum, four key areas of concern must be addressed. Investments from on-chain activities, demand, MEV bots and Trump projects.
