Key takeaways:
SOL has difficulty maintaining the $200 level as onchain activity declines and leveraged interest stays low.
The approval of a spot ETF and institutional interest could boost SOL, yet current fundamentals indicate limited potential for a rally.
Solana’s native token (SOL) has consistently struggled to maintain positions above $200 over the last six weeks, raising concerns among traders about the barriers to upward movement. This anxiety is amplified as competitors Ether (ETH) and BNB (BNB) have recently achieved new all-time highs.
The possible approval of a Solana spot exchange-traded fund (ETF) in the United States, coupled with companies indicating plans to incorporate SOL into their corporate reserve strategies, could drive the token past $250. Nevertheless, three conditions must be fulfilled for a substantial rally to occur.
Weak onchain and futures data cause investor apprehension
For SOL investors to regain trust, onchain activity on Solana needs to improve. Network fees decreased by 17% compared to the previous week, while transaction levels fell by 10%. In contrast, BNB Chain’s fees increased by 6%, with transaction volumes remaining stable. Ethereum’s layer-2 platforms also saw growth, with transactions on Base increasing by 14% and Arbitrum by 20%.
Relative to its $12.5 billion total value locked (TVL), Solana’s fee levels remain significant when compared to Ethereum’s nearly $100 billion. However, Solana’s chain revenue has plummeted 91% since peaking in January, a drop that coincided with the launch of the Official Trump (TRUMP) token and the broader memecoin craze.
The lack of bullish demand for SOL futures adds to the cautious atmosphere.
In neutral conditions, perpetual futures generally reflect an annualized premium between 8% and 14%, accounting for capital costs and counterparty risks. The current rate of 10% signifies balanced demand, which is not inherently negative but raises slight concerns given that SOL’s price has increased by 39% over the last two months.
Binance’s top-trader long-to-short ratio has shifted sharply toward bearish sentiment. This metric offers a broader overview of market sentiment since it encompasses futures, margin, and spot markets.
The demand for bullish SOL positions on Binance peaked last Saturday but has since significantly declined. According to derivatives data, while whales and market makers are not aggressively bearish, they remain cautious about SOL decisively surpassing $200.
Institutional support and SEC decisions are crucial triggers
SOL’s price showed minimal movement in response to reports that Galaxy Digital, Multicoin Capital, and Jump Crypto are collaborating to raise $1 billion for a Solana-focused digital asset treasury firm. Bloomberg reported the endorsement of the initiative by the Solana Foundation, yet the news did not generate momentum.
Related: Solana devs billed $5K for a single query via Google Cloud’s BigQuery
The last barrier to SOL reaching $250 is the pending decision from the US Securities and Exchange Commission (SEC) regarding multiple Solana spot ETF filings. Bloomberg’s analyst Eric Balchunas estimates a greater than 90% chance of approval, although the SEC’s final deadline is set for mid-October.
While SOL could still rise above $200 before these catalysts play out, the chances of a sustained rally seem limited due to weaker onchain activity, subdued demand for bullish leverage, and ongoing uncertainty surrounding the ETF decision.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s own and do not necessarily reflect or represent the views and opinions of Cointelegraph.
