SOL Price Fails to Hold $200 as Solana Network Volumes Drop 30%

Solana's native token SOL failed to sustain levels above $200 after multiple rejections between Dec. 25 and Dec. 26.

Solana's native token (SOL) faced selling pressure after failing to hold above the $200 level, sparking concerns about further price declines. Despite ranking second in weekly volumes, Solana underperformed with a 5.1% correction.

The cryptocurrency dropped sharply on Monday, countering the broader market trend and raising questions among traders. One factor contributing to the sell-off was a 30% decrease in Solana's onchain network volumes over seven days.

Solana's DApp activity also saw a downturn, with Orca and Phoenix showing 39% and 30% declines, respectively. Of greater concern, memecoins on Solana, which have been a significant driver of new users, posted poor 30-day performance.

Onchain activity, spanning token launches, staking, and trading, is crucial for demand. Among memecoins, Popcat fell 42% in the 30 days leading to Dec. 27, Dogwifhat (WIF) declined 40%, and BONK dropped 25%. In contrast, the total cryptocurrency market capitalization remained flat over the same period.

Notably, the correction was not exclusive to Solana-based memecoins, but Raydium's recent success had been heavily tied to the pump.fun memecoin frenzy. These challenges highlight the importance of sustaining onchain activity to maintain SOL demand.

Total deposits on the Solana network, as measured by total value locked (TVL), reached a two-year high of 44 million SOL. The 16% monthly increase was driven by platforms such as Binance Staked SOL, Jupiter, Drift, and Orca, according to DefiLlama data. On the downside, Jito, Sanctum, and MarginFi saw a decline in deposits.

SOL futures signals resilience despite price declineTo assess whether professional traders have turned bearish on SOL, the derivatives market offers key insights.

For example, monthly futures contracts typically trade at a 5% to 10% annualized premium in neutral markets. This premium compensates sellers for the longer settlement periods associated with these instruments.

While lower than the 20% premium recorded on Dec. 18, the current 10% premium is at the threshold of neutral-to-bullish sentiment. Considering SOL's 16% price decline during the same period, the derivatives market has shown resilience.

To gauge retail traders’ sentiment, analyzing SOL perpetual futures is essential. Exchanges manage risk through funding rates, which become positive when buyers require additional leverage and negative when sellers dominate.

Over the past month, the SOL funding rate has remained below 0.015%—equivalent to an annualized 1.2%—indicating a neutral market. However, on Dec. 27, the rate turned negative, signaling reduced demand from leveraged longs (buyers). This shift is concerning, given that SOL has declined 30% since its all-time high of $264.50 on Nov. 20.