Summary:
SOL has climbed back above $200; however, weak on-chain activity and increasing competition may hinder a lasting rally.
While traders lack strong bearish sentiment, stagnant network growth and shifting market share keep SOL’s potential for gains limited.
Solana’s native token SOL (SOL) rebounded above $200 on Tuesday, recovering from a flash crash on Friday that saw prices drop to $167. Despite this, the unprecedented $1.73 billion in long liquidations has had a lasting impact on SOL’s derivatives market, leading traders to question whether the bullish trend has waned and if the token can realistically reach $300 in this cycle.
There remains subdued demand for leveraged bullish positions, with the perpetual futures funding rate lingering around 0%. In typical markets, this measure usually varies between 6% and 12%, indicating longs (buyers) are willing to pay to hold their positions. Notably, SOL’s funding rate was around 4% prior to Friday’s crash, already below the neutral zone.
A negative funding rate generally signals a predominance of shorts (sellers), but this situation rarely endures long due to the costs associated with such bets. Nevertheless, the pressure in SOL’s derivatives market reflects the broader damage from Friday’s liquidations across the cryptocurrency sector.
Declining Solana network activity amid growing competition
On-chain metrics for Solana indicate a persistent lack of bullish momentum, even as SOL trades 31% below its all-time high of $295 from January. Network activity has struggled to regain strength since earlier memecoin waves in 2025, and Solana has lost its edge in the decentralized exchange (DEX) space as new competitors gain traction.
Decentralized applications (DApps) on Solana reported $35.9 million in weekly revenue, while network fees reached $6.5 million, reflecting a 35% decline from the previous month. This reduction diminishes demand for SOL as the payment token for blockchain operations. Decreased activity also lowers staking yields for SOL holders, further adding to the downside pressure.
Conversely, rival networks such as BNB Chain, Ethereum, and Hyperliquid have experienced a substantial increase in their fees, largely at Solana’s expense. BNB Chain’s notable $59.1 million in weekly fees underscores the success of four.meme, a memecoin launchpad platform fully integrated with Binance Wallet and positioned as a direct competitor to Solana’s Pump.fun.
Even if one believes BNB Chain’s growth is temporary, fees across the Ethereum ecosystem have surged. Layer-2 networks like Base, Arbitrum, and Polygon each saw their weekly fees spike by over 40%. Uniswap achieved its highest-ever weekly fees at $83.8 million, driven primarily by activity on Ethereum and Base. Meanwhile, Hyperliquid also capitalized on Friday’s market volatility, witnessing a significant increase in trading fees.
To assess whether SOL traders have taken a bearish turn, examining the balance of call (buy) and put (sell) options is insightful.
The SOL put-to-call volume ratio on Deribit has remained below 90% over the past week, indicating weak demand for neutral or bearish positions. Historically, when traders anticipate a correction, this metric jumps above 180%—a threshold reached last on Sept. 20, following an 11-day, 26.7% rally in SOL’s price.
Related: BNB Chain hits record user engagement, transactions surge 151% in 30 days
While SOL’s derivatives metrics may have been skewed by the fluctuations stemming from Friday’s flash crash, the ongoing decline in on-chain activity as competing blockchain networks gain ground is worrying. The advancements of Aster, Hyperliquid, and Uniswap have directly impacted Solana’s potential for growth.
Even without explicit bearish sentiment from traders, it seems improbable that a single event, like the anticipated approval of spot Solana exchange-traded funds in the U.S., would propel its price to $300 in the short term.
This article is for general information purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily represent the views of Cointelegraph.
