Solana Struggles at $140 Resistance as Network Activity Declines and ETF Competition Intensifies
At the time of writing, Solana (SOL) is trading above $139. This is a drop of more than 3.5% in the last 24 hours, as the layer-1 blockchain
Quick overview
- Solana (SOL) is currently trading above $139, experiencing a drop of over 3.5% in the last 24 hours amid investor concerns.
- The token has struggled to break the $140 resistance level and recently fell to a one-week low of $123, with critical support observed between $134 and $139.
- Solana's total value locked (TVL) has decreased significantly, indicating a cooling ecosystem, while recent ETF outflows have added to bearish sentiment.
- Despite current challenges, there are potential optimistic factors ahead, including a bridge to Coinbase's Ethereum Layer 2 network and upcoming governance token releases.
At the time of writing, Solana SOL/USD is trading above $139. This is a drop of more than 3.5% in the last 24 hours, as the layer-1 blockchain faces a number of challenges that are shaking investor confidence. The token has tried and failed several times to break over the important $140 resistance level. This makes people wonder how it will get back to the $200 mark that traders have been expecting.
SOL/USD Technical Analysis Points to Critical Support Zone
SOL fell to a one-week low of $123 after bouncing back from recent market turmoil. It then stabilized. Technical analysts are keeping a careful eye on the support zone between $134 and $139 because it is so important for keeping the present price structure. The token hit a wall at $147 on Thursday, which caused a 6% drop that has traders worried about what may happen in the near future.
The low demand for leverage is especially worrying, as SOL perpetual futures have an annualized funding rate of only 4%, which is significantly below the neutral 6% level. This shows that traders are hesitant to initiate optimistic positions, which is a sign of more general anxiety over Solana’s short-term path.
Solana Network Metrics Signal Cooling Ecosystem Activity
There is a worrying trend in Solana’s on-chain fundamentals. The total value locked (TVL) on the network has dropped from $13.3 billion to $10.8 billion in just two months. Major ecosystem projects including Kamino, Jupiter, Jito, and Drift have seen deposits drop by more than 20%. Even more worrying, the amount of decentralized exchanges on Solana fell 40% to $19.2 billion in the week ending November 30, down from $32 billion four weeks earlier.
People are worried that this drop in trading activity could lead to a feedback loop, where less network use lowers SOL demand, which makes more traders look for chances elsewhere. These anxieties have only grown stronger since the rise of competitive platforms like Monad, which saw $1.2 billion in DEX volumes in its first week.
Solana is still the second-largest network by TVL, with $73.2 billion, but it is facing more competition from Ethereum’s layer-2 ecosystem, which includes Base, Arbitrum, and Polygon. The new Fusaka upgrade to Ethereum has made it easier to scale and handle wallets, which makes it less likely that users would switch to other networks.
Record Solana ETF Outflows Add to Bearish Sentiment
U.S. spot On Wednesday, Solana ETFs saw their biggest single-day redemption, with $32.19 million leaving the funds. This was the third and biggest withdrawal since the funds were launched on October 28. The 21Shares TSOL product alone caused $41.79 million in outflows, which were only partially made up for by small inflows into other funds.
This ETF weakness is very different from Bitcoin, Ethereum, and XRP exchange-traded products, which experienced $1.06 billion in inflows over the same time period. The recent approval of spot ETFs for XRP, Litecoin, and Dogecoin has made it harder for institutions to get money, and several other Solana competitors are expected to get similar approvals in the next few months.
Macroeconomic Pressures and the Road Ahead
SOL sentiment is low because of worries about the economy as a whole. In November, there were 71,321 layoffs in companies, the most since 2008. At the same time, worries about consumer credit have grown since estimates that half of buyers plan to take out personal loans during the holidays.
But there are still optimistic factors on the way. Base, Coinbase’s Ethereum Layer 2 network, has opened a bridge to Solana. This lets users trade and use Solana assets in Base apps. Solana Mobile also wants to release the SKR governance token in January 2025. This token will be tied to the new Seeker phone and will have a fixed quantity of 10 billion tokens.
Solana Price Prediction: Cautious Optimism Amid Uncertainty
- Near-term outlook (1–3 months): SOL is likely to stay between $130 and $150 while it processes recent losses and waits for clearer signals from the economy as a whole. To keep the $123 low from being tested again, the $134-$139 support zone must hold.
- Medium-term outlook (3-6m months): If the government stimulus measures work out as many traders think they will, SOL could try again to reach $200. But for the recovery to last, network indicators need to get better, especially DEX volumes and TVL growth.
The Federal Reserve’s decision on interest rates on December 10 and the release of new economic data will be very important. Even if many are still feeling “Fear” because of the increases in October’s liquidation, any good news on the macro front could quickly change the story, surprising bears and starting the broader altcoin rebound that many people in the market expect.
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