Nestled in the world of cryptocurrencies, Solana (SOL) faces some tough challenges ahead. Memecoin trends are unpredictable, global uncertainties loom large, and many investors are playing it safe.
Recently, SOL dropped by 17.2% from January 24 to January 27. It hit a low point before bouncing back to $235. However, that’s still 26% below its all-time high of $295 from January 19. This decline partly reflects a 40% decrease in Solana's on-chain trading activity. But don’t count SOL out just yet; it could still see gains in 2025.
When we look at the competition, Solana’s rivals have held up better. For instance, BNB Chain volumes dipped only 1%, while Ethereum’s base layer saw a 10% drop in activity over the same week. Other competitors and Ethereum layer-2 solutions also reported 25% to 30% lower on-chain volumes during this period.
Within Solana's ecosystem, some platforms struggled. Meteora saw a 45% drop in volumes, Orca fell by 62%, and Lifinity experienced a 53% decline in activity. On a brighter note, the Pump.fun memecoin launchpad saw a 24% increase in volume. Meanwhile, Solana's Raydium platform led the pack with $35.1 billion in weekly on-chain activity.
Now, let’s talk about the total value locked (TVL) in Solana. It rose by 27% in the 30 days ending January 28. This growth significantly outpaced Ethereum, which dropped by 9%, and BNB Chain, which slipped by 1%. Solana solidified its second-place position in the market, widening the gap with Tron. Key players like Jito and Raydium contributed to this growth, with deposits rising by 29% and Binance Staked SOL growing by an impressive 52% in that month.
Ethereum's recent decline in activity can be traced back to weaker performances in platforms like Lido, EigenLayer, and Ether.fi. EigenLayer, launched in June 2023, currently holds $13.6 billion in total value locked (TVL), which exceeds the total deposits of the entire Solana ecosystem. This highlights Ethereum's dominance and shows that some investors are still willing to pay transaction fees of $5 or more.
To gauge sentiment among Solana traders, we should look at the monthly SOL futures contracts premium. Typically, these contracts trade at a 5% to 10% premium over spot markets. A premium above 10% indicates strong bullish sentiment, while levels below 5% suggest weaker confidence among buyers.
On January 27, SOL futures briefly spiked to a 12% annualized premium but quickly fell back to 6%. This relatively low premium, despite a 21% price rally over the past month, indicates a lack of enthusiasm among investors. Some analysts believe that recent gains in SOL's price were primarily driven by memecoins and the launch of the Official Trump (TRUMP) token.
Regardless of whether this caution stems from global economic uncertainties or stock market fluctuations, the chances of SOL reaching a new all-time high in the short term seem slim. Analysts point out that the recent price gains were largely fueled by memecoins and the launch of the Official Trump token.
Looking ahead, potential drivers for SOL’s future price appreciation include the migration of stablecoins from Tron to Solana and the growing adoption of Web3 applications, especially in the artificial intelligence sector.