SOL Recovery Faces Challenges Amid Market Uncertainty
Key Insights
Solana's native token, SOL, attempted a recovery but struggled to reclaim the $140 mark, despite recovering some recent losses. Investor sentiment remains cautious due to a negative funding rate in SOL perpetual futures and decreasing onchain activity on the Solana network.
Market Performance and Concerns
SOL has declined by 30% over the past month, trailing behind the broader altcoin market. Traders are evaluating the potential for a sustained bullish trend. Much of the current concern among crypto investors is linked to economic uncertainty in the U.S., marked by labor-market challenges and increased focus on AI investments.
Derivatives Market and Onchain Activity
Demand for bearish leverage on SOL perpetual futures has been steady since Friday, with the funding rate turning negative. This indicates traders are paying to maintain positions that benefit from further price declines. SOL futures open interest has decreased by 27% over the past 30 days, reflecting reduced demand for leverage. The premium on SOL monthly futures relative to spot prices has dropped to zero, suggesting a lack of bullish sentiment.
The total value locked (TVL) on the Solana network fell to $10.5 billion, a 20% decline from a month ago. Weekly blockchain revenue has also decreased, contributing to SOL's underperformance compared to the broader altcoin market.
Activity Metrics and Future Outlook
Solana continues to lead in active addresses and transaction count, significantly outpacing the BNB Chain. Data shows a 13% increase in activity on Solana, while Ethereum recorded a 15% decline. While these metrics may bolster confidence among SOL investors, they are not sufficient to trigger a sustained bullish trend. SOL has risen 14% since its low of $121.50, but a continued upward trajectory is uncertain given the fragile derivatives market and weak network fees.
Disclaimer: This article is for informational purposes only and should not be construed as legal or investment advice. The views expressed are those of the author and do not necessarily reflect those of Codeum.