Solana’s native token SOL is experiencing a downward pressure following a nearly 6% drop on Thursday. The token failed to break past the $147 resistance level, a move attributed by traders to cautious investor responses towards weakening U.S. labor market data and declining consumer sentiment, impacting the broader crypto sector. 2 Months of forced liquidations wiped out leveraged positions further dampening SOL price momentum.
Traders express concern over Solana potentially needing longer than expected to regain its $200 price range. The decline coincides with a sharp decrease in on-chain activity across the Solana ecosystem, contributing to the downward pressure. 8
The total value locked (TVL) has fallen sharply to $10.8 billion, down from $13.3 billion in September. Several major Solana-based protocols saw deposits fall exceeding 20%, with trading activity on decentralized exchanges weakening further, reinforcing a general decline in network participation.
While Solana remains the second-largest blockchain by TVL, trailing behind Ethereum’s $73.2 billion, ETH’s momentum is bolstered by its own layer-2 networks such as Base, Arbitrum, and Polygon.
The recent Fusaka upgrade, enhancing scalability and wallet operations, has reduced pressure for users to migrate liquidity to competing chains like Solana, contributing to the current market dynamics.
Despite this decline, Solana’s DEX volumes fell to $19.2 billion in the seven days ending Nov. 30, a 40% drop from four weeks earlier. This slowdown raises concerns about a potential feedback loop, reducing demand for SOL and encouraging traders to explore newer ecosystems like Monad, which recorded $1.2 billion in DEX volume during its launch week.
Beyond the bearish market sentiment, growing competition from ETFs adds to the downward pressure.
The recent approvals of XRP, Litecoin, and Dogecoin spot ETFs have intensified competition for institutional flows, while several Solana rivals are expected to receive similar approval soon.
Meanwhile, recent layoffs, tightening credit conditions, and increased reliance on personal loans for holiday shopping have further impacted SOL sentiment.
Market optimism may hinge on government interventions that could reignite investor confidence. Until then, SOL faces a significant downward pressure, hindered by declining network activity, shifting ETF trends, and a cautious macroeconomic environment.
What could push SOL back towards $200?