Solana's native token (SOL) has repeatedly failed to hold above the $200 mark in the past six weeks, raising questions among traders about the underlying limitations. This article discusses factors influencing price dynamics and potential growth opportunities.
Sluggish onchain activity and investor caution
Currently, onchain activity on Solana is declining. Network fees have fallen by 17% over the past week, and the number of transactions has decreased by 10%. In comparison, BNB Chain has seen a 6% rise in fees, while Ethereum's layer-2 transactions are also increasing. Despite total value locked (TVL) on Solana being $12.5 billion, its revenue has plummeted by 91% since January peaks.
Role of institutional investors and SEC
SOL's price remained unaffected by reports that Galaxy Digital, Multicoin Capital, and Jump Crypto are working to raise $1 billion for a Solana-focused digital asset management company. There are also increasing expectations of Solana spot ETF approval from the SEC, with analysts estimating a likelihood above 90%.
Growth prospects and key factors
Despite the potential for SOL to reach $250, three conditions need to be met: a recovery in blockchain activity, an increase in demand for bullish leverage in futures, and a favorable SEC decision on ETFs. Current trends indicate that these factors are crucial for sustainable growth.
At present, Solana faces challenges in maintaining prices above $200, and the likelihood of sustainable growth remains low. Investors are closely monitoring developments, especially regarding the SEC's decision and market dynamics.
