Solana’s Price Hits a Barrier at $150 as Multiple Challenges Escalate

SOL price struggles to gain upward momentum as DApp volumes drop, spot ETF prospects diminish, and memecoins fail to rally. 

Source: coinmuhendisi.com

Since August 11, Solana’s native token, SOL, has had difficulty closing above $150. Despite showing steady buying interest when testing the $125 support level, SOL remains relatively stagnant compared to four months ago. Even more concerning is that, while the Solana network has seen significant growth in deposits and activity during this time, this expansion has not yet translated into a higher SOL price. Let's explore the factors keeping SOL's price below $150 and what changes are needed for it to break through this barrier.

The Excitement Surrounding Solana's Memecoins Appears To Have Dwindled

Some market participants suggest that the recent hype surrounding SOL was fueled by a few airdrops, memecoins, and pump and dump activities, which proved unsustainable. Over the past thirty days, notable price corrections have affected several tokens: Dogwifhat (WIF) dropped by 38%, BONK fell by 39%, Lido (LDO) declined by 43%, POPCAT decreased by 48%, and Wormhole (W) lost 31%. According to DappRadar, pump.fun volume has decreased by 44% over the past week, now totaling $133.5 million. Analytics data shows that 98.6% of pump.fun memecoins failed to list on decentralized exchanges, which require a minimum liquidity of $69,000. However, investors have not been deterred, as pump.fun activities generated $6.3 million in fees last week. In comparison, AAVE accrued $4.4 million in fees during the same period, even with holding $11.72 billion in total value locked (TVL).

A recent analysis reveals that only 3% of traders have earned more than $1,000 from memecoin trading. Messari data engineer Mike Kremer contends that memecoins are far more destructive due to their lack of real value or utility, unlike DeFi tokens. Kremer notes that insiders or cartels create tokens, hype them up, and lure retail investors. As a result, memecoins, a major driver of SOL demand, are now under scrutiny. Nevertheless, it would be short sighted to assess investor interest in SOL solely based on memecoin activity. The Jito liquid staking application and the decentralized exchange Raydium have both seen increased fees over the past 30 days. Additionally, the Solana Network leaderboard includes lending and liquidity platform Kamino, the Marinade staking solution, and Jupiter, a decentralized exchange offering perpetual contracts.

Decreased Solana Network Activity And Diminishing Chances For A Spot ETF

Unfortunately for Solana, data indicates that the decline in network activity is affecting all sectors, including DeFi, NFT marketplaces, Web3 infrastructure, gaming, gambling, and collectibles. In contrast, the top three DApps on BNB Chain Treasure Ship Game, Move Stake, and PancakeSwap saw a 7% increase in users over the same 7 day period. This trend highlights a reduction in Solana network activity, which is adversely impacting SOL token performance.

Moreover, part of the recent surge that pushed SOL’s price above $185 in late July was driven by the anticipation of multiple spot exchange traded fund (ETF) applications in the United States. However, enthusiasm waned after the US Securities and Exchange Commission (SEC) reportedly expressed concerns about SOL potentially being classified as a security, according to The Block. Consequently, Cboe Global Markets chose not to move forward with the 19b 4 forms, although this does not entirely rule out the possibility of a Solana ETF in the future.

Nate Geraci, President of ETFStore, expresses doubt about the approval of a spot Solana ETF under the current US administration, citing the need for a legitimate crypto regulatory framework. As a result, despite Cboe's discussions with the SEC, analysts remain skeptical about the approval of other crypto ETFs in the US due to the absence of clear regulatory guidelines. Thus, a significant potential catalyst for SOL’s price has been postponed.

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