Solana Faces Potential Downside Amid Declining Network Activity and Reduced Demand

  • Recent developments in the cryptocurrency market highlight the struggles faced by Solana as it battles declining network activity and market sentiment.

  • As transaction fees reach a six-month low, the future of Solana’s price stability seems precarious, raising concerns about its competitive position in the market.

  • According to COINOTAG, “Without a rebound in activity, Solana’s price could regress further, potentially impacting its long-term viability.”

Solana faces declining network activity and transaction fees, risking further price corrections following a recent downturn to a seven-month low.

Solana’s Network Activity Hit Multi-Month Lows

Solana’s network activity is fading fast, with transaction fees plunging to a six-month low of 53,800 SOL last week – an 85% collapse from January’s peak during the TRUMP and MELANIA meme coin frenzy.

Solana network fee

Source: Artemis Terminal

With fewer traders interacting on-chain, demand for SOL is shrinking. Solana’s Total Value Locked (TVL) has also dropped to $8.15 billion from $14.50 billion in mid-January, signaling a major liquidity exit.

The impact goes beyond fees – active addresses have dropped 35% to 3.8 million.

With Solana’s network activity on a decline, no key demand zones on its price chart, and massive unwinding in both Futures and DeFi trade, holding $120 looks increasingly difficult.

Is a deeper drop to new yearly lows next?

Key Levels to Watch

The factors above align with SOL’s 55% price drop since mid-January, just a day after hitting its $270 all-time high.

The surge in Solana’s network activity driven by the TRUMP and MELANIA memecoin frenzy has clearly faded.

With the crypto market shedding over $200 billion and Bitcoin sliding below $80K, high-cap assets like SOL are struggling to hold key levels.

Sell-side liquidity has driven $40.75 million in long liquidations, reinforcing downside pressure.

Given weak on-chain demand on Solana’s network, heavy liquidations, and continued unstaking, SOL risks extending losses toward $100 – $112 – especially if Bitcoin fails to reclaim critical support.

SOL price

Source: TradingView (SOL/USDT)

This level previously acted as a strong demand zone a year ago, sparking a rebound to $180.

However, given the deterioration in Solana’s network activity and the broader risk-off sentiment, a FOMO-driven recovery remains distant, potentially exposing SOL to a deeper drop toward $100.

Conclusion

In summary, Solana is facing significant challenges as reduced network activity and a shaky market push it closer to critical support levels. With ongoing sell pressure, the potential for a downturn toward new yearly lows looms large, making it crucial for traders and investors to monitor the situation closely. The near-term outlook for SOL appears grim unless a rebound in activity brings renewed interest and demand.

Don't forget to enable notifications for our Twitter account and Telegram channel to stay informed about the latest cryptocurrency news.

BREAKING NEWS

Ethereum Set to Ignite New Golden Era as U.S. Crypto Bill Spurs DeFi Renaissance

On July 10th, Wang Feng, founder of Langang Interactive,...

Bitcoin Thunderbolt Station Surpasses $900M in Deposits, Revolutionizing Mainnet with Native Asset Integration

On July 10, the Bitcoin Thunderbolt Station reservation phase,...

BYBIT LISTS PUMPFUNUSDT PERPETUAL CONTRACT

BYBIT LISTS PUMPFUNUSDT PERPETUAL CONTRACT

$PUMP listed on Hyperliquid futures

$PUMP listed on Hyperliquid futures

$HYPER listed on Upbit spot (KRW)

$HYPER listed on Upbit spot (KRW)
spot_imgspot_imgspot_img

Related Articles

spot_imgspot_imgspot_imgspot_img

Popular Categories

spot_imgspot_imgspot_img