- Solana’s recent negative funding rates indicate bearish sentiment among traders, though a short squeeze or favorable news could trigger a price spike.
- A shift in institutional interest toward Solana could bolster confidence in the network, driving prices higher and supporting a return to the $180 level.
Solana (SOL) price has encountered serious resistance at around $180 following a recovery from a late-February low of $125. While this revival saw SOL lag 50% behind its all-time high price of $295, four very important factors are likely to see the token revert back to the $180 figure.
1. On-Chain Activity Revival For Solana
Solana’s network has experienced slowdown in major categories such as liquid staking, decentralized exchanges, and NFT marketplaces. Network fees have declined by 73% over the last month, indicating lower user activity, DeFiLlama reports.
The active addresses on Jito, Solana’s largest liquid staking platform, dropped by 56% in the past 30 days, while Magic Eden, one of the most popular NFT marketplaces, experienced a 38% decline. Save (previously Solend), a lending protocol, also lost 42% of its active users.
In comparison, Base, Ethereum’s layer-2 network, saw only a 2% fall in active addresses, and Ethereum’s main chain experienced a 17% fall. If Solana can turn this around and bring back new activity, it might be the catalyst for a price recovery.
2. Reappearance Of Leverage Demand For SOL Token
Market sentiment is frequently expressed in terms of leverage demand, especially using perpetual futures contracts. In the last three days, SOL’s funding rate has been negative, indicating short sellers are paying to maintain their position, as mentioned in our earlier report. The rate of -0.01% every eight hours is not atypical but reflects a lack of confidence among the traders.
A move into long positions may ignite a price spike, particularly if surprise news — like the listing of a spot SOL ETF in the United States — catches short sellers by surprise. A short squeeze in such circumstances may hasten SOL’s move back to more elevated price levels.
3. Decline In MEV Bot Activity
A minority of users have had a disproportionate impact on Solana’s transaction fees. It has been reported that 95% of network fees are generated by only 1.3% of users, predominantly from market-making companies such as Wintermute and maximum extractable value (MEV) bots.
These bots partake in techniques such as sandwich attacks, through which they engineer outstanding trades on decentralized exchanges to gain a profit. Such activities have increased volatility and stifled organic growth. If Solana’s network realizes improvements that suppress the domination by MEV bots, it has the potential to create a better environment for stimulating long-term participation.
4. Solana Price To Boost With Potential Institutional Investment
A large institutional investor, World Liberty Financial, has been buying multiple cryptocurrencies such as Ethereum (ETH), Wrapped Bitcoin (WBTC), Tron (TRX), Chainlink (LINK), and Aave (AAVE). Yet, it has not shown interest in SOL.
That is newsworthy considering the Official Trump (TRUMP) memecoin was launched on Solana. If World Liberty Financial were to invest in SOL, it might indicate that the investor is bullish about the network’s future, thus pushing prices higher.
If on-chain activity, leverage demand, MEV bot behavior, and institutional investment improve, Solana price could gain momentum. This could help the SOL price recover to the $180 level.
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