Solana Struggles as DApp Activity Drops: Will $180 Hold?

Declining Network Activity and DApp Volumes

One of the major challenges facing Solana is a significant drop in on-chain network activity. Over the past week, Solana has experienced a 30% decrease in network volumes. Despite securing second place in weekly volumes, with $20.9 billion, Solana’s performance was the weakest among the top ten blockchains. This decline in activity has been accompanied by a sharp fall in DApp engagement.

• Orca and Phoenix DApps have seen a 39% drop in activity.
• Raydium’s user engagement has decreased by 30%.
• Interest in memecoins has also waned, with tokens like Popcat and Dogwifhat dropping 42% and 40%, respectively.

This declining network activity is putting pressure on Solana’s price, as investor interest wanes, and the overall ecosystem struggles to maintain its momentum.

Derivatives Market Signals Resilience

Despite these challenges, the derivatives market is showing signs of optimism. Monthly futures contracts for SOL are currently trading at a 10% annualized premium, suggesting a neutral-to-bullish sentiment among professional traders. This positive sentiment is reflected in the willingness of traders to engage with Solana, despite the current market downturn.

However, a slight decline in demand from leveraged buyers is evident. On December 27, the funding rate for SOL perpetual futures turned negative, indicating reduced demand for SOL from traders using leverage. This shift in sentiment adds an element of caution, signaling that the market may be experiencing a temporary pause in bullish momentum.

Outlook: Can $180 Hold?

The decline in Solana’s on-chain activity presents a moderately bearish outlook for the token’s short-term price trajectory. Analysts suggest that if current trends continue, SOL could drop to $167. However, the resilience in the derivatives market signals that the downside risk may be limited, with larger market players showing continued interest in SOL.

With key support levels in play, $180 emerges as a critical price point for Solana. If SOL can hold above this level, it may prevent a deeper decline. Traders will be closely monitoring the market for any signs of a reversal in activity and sentiment.

Conclusion

Solana faces significant challenges in the short term, with declining network activity and weaker engagement across DApps. However, the derivatives market provides some optimism, signaling that the token may still have room to stabilize above the critical $180 support level. While the broader market conditions remain volatile, the coming days will be crucial for Solana as it attempts to regain its footing and hold above key price levels.