Key takeaways:
-
Solana network activity and fees have declined, yet spot ETF expectations maintain investor interest in SOL.
-
Validator income sustainability and staking inflation are risks, but institutional inflows could drive SOL gains.
Solana’s native token, SOL (SOL), surged 10.5% after testing the $191 level on Friday. Even with this rebound, the token’s price remains 10% lower over the past two weeks, trailing rivals Ether (ETH) and BNB (BNB). Traders are now weighing SOL’s chances of climbing back to $250 and trying to understand the factors behind its weaker performance.
Investor sentiment improved over the weekend after US President Donald Trump signaled his intention to avoid a government shutdown of non-essential federal agencies. However, Congress still has not secured the 60 votes required to pass a temporary funding bill by Tuesday, risking “unpredictable and immediate economic ripples,” according to Yahoo Finance.
Meanwhile, gold reached an all-time high of $3,833 on Monday, underlining continued unease about the US fiscal debt outlook. Even if lawmakers strike a short-term deal, the Treasury must still pay more than $1 trillion annually in interest. This widening gap between government revenues and expenditures is pushing savers toward scarce assets, including cryptocurrencies.
Although the broader cryptocurrency market posted gains on Monday, SOL has been unable to hold the $212 level. Part of the frustration among investors stems from declining activity across the Solana network.
Over the past seven days, the number of transactions on Solana fell by 10%, while fees dropped nearly 50%, according to Nansen data. By contrast, several competitors posted notable increases, including a 56% jump in fees on BNB Chain, while Arbitrum and HyperEVM more than doubled their fee revenue from the prior week.
Perpetual futures surge on Hyperliquid, Aster, while edgeX hurts SOL sentiment
The rapid expansion of synthetic perpetual futures on Hyperliquid, Aster and edgeX has also weighed on sentiment toward SOL. Solana once led decentralized exchange activity through platforms such as Meteora, Raydium and Pump, which led many SOL holders to overestimate the network’s competitive edge on fees and user experience.
Hyperliquid has chosen to launch its own chain to reduce fees and eliminate validators’ maximal extractable value (MEV). Aster, a project backed by YZi Labs (formerly Binance Labs) and currently integrated with BNB Chain, also plans to introduce its own layer-1 network.
For SOL bulls, the strongest catalyst for reversing the token’s underperformance is the anticipated approval of standard exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC). The regulator faces a final deadline on Oct. 10, and analysts assign odds of 95% or higher to an approval, fueling hopes for substantial inflows during the first months of trading.
Related: Aster weighs vesting schedules for token airdrop recipients
SOL’s momentum also hinges on how investors view its native staking yield. Critics warn that Solana’s inflation poses a risk, given the network’s nearly 1,000 validators and their significant setup and operational costs.
According to X user ‘Boxmining,’ 76% of validator income on the Solana network comes from newly issued coins, rather than MEV or priority fees. The analysis raises questions about the sustainability of the staking reward rate in the coming years, which could weigh on demand for a Solana ETF.
Traders should not assume a price decline based solely on weaker onchain activity, as inflows from companies accumulating SOL reserves and the potential approval of a spot ETF could set the stage for a SOL rally toward $250.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
