Solana is currently facing significant challenges in gaining upward momentum. After a recent rejection at $147, the price of SOL has dropped by 6%, settling around $138. This stagnation has traders questioning the timeline for a potential rebound to $200.
One of the key issues plaguing Solana is the notable decrease in its total value locked (TVL), which has fallen from $13.3 billion two months ago to $10.8 billion. Major projects within the ecosystem, such as Kamino, Jupiter, Jito, and Drift, have each experienced deposit declines of 20% or more. Additionally, decentralized exchange (DEX) volumes have seen a drastic reduction, plummeting from $32 billion four weeks ago to just $19.2 billion in the week ending November 30, marking a 40% drop.
The competitive landscape is also heating up, particularly with Ethereum“s recent Fusaka upgrade that enhances scalability, reducing the incentive for users to transfer funds to Solana. Furthermore, new layer-1 chains such as Monad have emerged, boasting impressive DEX volumes of $1.2 billion within their first week.
In terms of trading dynamics, the demand for SOL futures remains weak, with an annualized funding rate hovering at 4%, which is below the neutral threshold of 6%. Compounding these challenges, other altcoins like XRP, Litecoin, and Dogecoin recently secured spot ETF approvals in the United States, drawing institutional capital away from Solana. Meanwhile, Solana ETPs have seen negligible inflows compared to the $1.06 billion inflow recorded collectively by Bitcoin, Ethereum, and XRP ETPs.
In summary, Solana is under significant pressure from declining network activity, lackluster leverage demand, and increasing competition from rival altcoin ETFs. The path back to $200 for SOL is likely contingent on improved macroeconomic conditions or decisive catalyst events.
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