Solana (SOL) Struggles to Regain Bullish Momentum After 50% Drop

Solana Faces Major Hurdles: Why SOL is Struggling Despite Recent Gains

Solana’s native token, SOL, has seen a 17% increase after falling to a low of $125 on February 28. However, it encountered significant resistance near the $180 mark, and its current price of $145 represents a 50% drop from its all-time high of $295 on January 19. This sharp decline has raised concerns among traders about Solana’s ability to regain its bullish momentum, especially after the recent market crash in memecoins.

Decline in On-Chain Activity

While analysts attribute much of the recent decline in SOL’s value to the collapse of the memecoin market, on-chain activity across various sectors, including liquid staking, tokenized assets, NFT marketplaces, and synthetic perpetuals, has also significantly declined. According to DefiLlama, Solana’s network fees have dropped by 73% in the past four weeks, indicating a reduced appetite for SOL. This decrease in activity reflects broader market conditions, not just the fallout from memecoin speculation.

Falling Active Addresses Across Solana Ecosystem

The number of active addresses interacting with Solana’s largest liquid staking platform, Jito, has fallen by 56% over the last 30 days, according to DappRadar. Similarly, the Magic Eden NFT marketplace saw a 38% decrease in active addresses, while Save (formerly Solend), a platform offering collateralized lending, experienced a 42% drop in users.

Lack of Leverage Interest and External Factors

Another challenge limiting SOL’s upside potential is the lack of interest from leveraged traders. SOL perpetual futures have been in negative funding for the past three days, with short sellers paying to keep their positions open. This lack of demand from leveraged buyers, combined with the absence of investment from Trump’s project in SOL, further dampens sentiment. Despite the launch of the Official Trump (TRUMP) memecoin on Solana, the project reportedly holds positions in other cryptocurrencies like Ethereum (ETH), Tron (TRX), and Chainlink (LINK), but none in SOL.

SOL’s Path to Regaining Momentum

For SOL to regain its bullish momentum, it must address four key concerns: on-chain activity, leverage demand, the influence of MEV bots, and investment from Trump’s project. Without progress in these areas, SOL may struggle to reclaim the $180 level in the near future.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.