Essential insights:
While Solana network activity and fees have decreased, expectations for spot ETFs continue to attract investor interest in SOL.
Concerns over validator income sustainability and staking inflation exist, but institutional inflows may drive SOL growth.
Solana’s token, SOL (SOL), jumped 10.5% after hitting the $191 mark on Friday. Despite this recovery, the token’s value is still 10% down over the past fortnight, lagging behind competitors Ether (ETH) and BNB (BNB). Traders are assessing SOL’s prospects of reaching $250 and trying to discern reasons for its recent underperformance.
Investor sentiment improved over the weekend when US President Donald Trump indicated he would work to prevent a government shutdown of non-essential federal agencies. However, Congress has yet to secure the 60 votes required for a temporary funding bill by Tuesday, raising concerns of “unpredictable and immediate economic effects,” according to Yahoo Finance.
In contrast, gold hit a record high of $3,833 on Monday, highlighting ongoing worries regarding the US fiscal debt situation. Even if lawmakers achieve a short-term agreement, the Treasury must still pay over $1 trillion annually in interest. This growing divergence between government revenues and spending encourages savers to turn to scarce assets, including cryptocurrencies.
Despite broader cryptocurrency market gains on Monday, SOL struggled to maintain the $212 mark. Investor frustration partly stems from falling activity on the Solana network.
Over the last week, Solana’s transaction count dropped by 10%, while fees nearly halved, according to Nansen data. In contrast, various competitors, including BNB Chain, experienced prominent increases, with fees on BNB Chain rising by 56%, while Arbitrum and HyperEVM more than doubled their fee revenue compared to the previous week.
Perpetual futures thrive on Hyperliquid, Aster, as edgeX dampens SOL sentiment
The swift growth of synthetic perpetual futures on Hyperliquid, Aster, and edgeX has negatively impacted sentiment towards SOL. Solana previously dominated decentralized exchange activity via platforms like Meteora, Raydium, and Pump, leading many SOL holders to overestimate the network’s competitive advantages in fees and user experience.
Hyperliquid has opted to launch its own chain to minimize fees and eliminate validators’ maximal extractable value (MEV). Aster, supported by YZi Labs (previously Binance Labs) and currently integrated with BNB Chain, also intends to introduce its own layer-1 network.
For SOL proponents, the most significant catalyst for reversing the token’s underperformance is the expected approval of standard exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC). The regulator has a final deadline of Oct. 10, and analysts believe there’s a 95% or higher chance of approval, raising hopes for significant inflows during the initial trading months.
Related: Aster reviews vesting schedules for token airdrop recipients
SOL’s performance also depends on how investors perceive its native staking yield. Critics caution that Solana’s inflation poses risks due to the network’s nearly 1,000 validators and their substantial setup and operational costs.
According to X user ‘Boxmining,’ 76% of validator income on Solana is derived from newly issued coins, rather than from MEV or priority fees. This analysis raises concerns about the sustainability of the staking reward rate in the upcoming years, which could affect demand for a Solana ETF.
Traders should be cautious not to predict a price drop solely based on declining on-chain activity, as inflows from companies accumulating SOL reserves and the potential approval of a spot ETF may pave the way for a SOL rally towards $250.
This article is for informational purposes only and is not intended as legal or investment advice. The views and opinions expressed herein are those of the author and do not necessarily reflect the views or opinions of Cointelegraph.
