Solana slumps to 45-day low, trading at $130. This decline coincides with a 14% overall dip in the cryptocurrency market, indicating specific issues for SOL. Despite a brief rally to $151 on June 16, Solana has experienced weak on-chain activity and low demand from derivatives traders. These factors suggest SOL’s bearish momentum is likely to continue, potentially retesting the $130 support level.
ETF Absence Hurts SOL
The absence of an exchange-traded fund (ETF) for Solana is also impacting the token. While the S&P 500 reached record highs, cryptocurrencies—particularly altcoins like SOL—have struggled. Bitcoin and Ether benefit from institutional investments via ETFs, leaving SOL at a disadvantage.
Top blockchains ranked by 7-day DApps volume, USD. Source: DappRadar
Solana’s Competitors
The competition from other smart contract blockchains is fierce. Solana’s staking reward rate of 1.3% above its token inflation rate is less attractive compared to Ethereum’s effective 2.8%. This discrepancy affects Solana’s total value locked (TVL), which has stagnated below $30 million since May.
Market Sentiment and Derivatives
BitMEX co-founder Arthur Hayes has predicted that Solana may not maintain its position as a top decentralized application (DApp) network. Solana’s weekly volume of $589 million is significantly lower compared to competitors like BNB Chain and Arbitrum.
The derivatives market also reflects this sentiment. Funding rates for SOL perpetual futures have remained neutral, with limited interest from traders. The lack of enthusiasm suggests SOL may soon fall below the $130 support level.
SOL perpetual futures 8-hour funding. Source: Laevitas.ch
Solana slumps to 45-day low and to improve investor confidence, Solana needs to enhance its on-chain activity and attract more interest from the derivatives market. Without these changes, SOL may continue to face downward pressure.
