Solana's SOL Token Surges 17% After 50% Drop From All-Time High

Solana's native token, SOL, has experienced a significant price fluctuation, rising by 17% after hitting a low of $125 on February 28. However, it faced strong resistance near the $180 mark. The current price of $145 represents a 50% decline from its all-time high of $295 on January 19, raising concerns among traders about SOL's ability to regain bullish momentum. Analysts attribute the sharp decline in SOL's value to the memecoin market crash, which has led to a decrease in onchain activity across various sectors, including liquid staking, tokenized assets, yield aggregators, synthetic perpetuals, NFT marketplaces, and artificial intelligence infrastructure.

Decreased blockchain activity suggests a reduced appetite for SOL, with Solana network fees dropping by 73% compared to four weeks ago. The surge in activity was largely driven by memecoin token launches and decentralized exchange (DEX) trading. The number of active addresses interacting with Jito, Solana’s largest liquid staking decentralized application, fell by 56% over the past 30 days. Similarly, the NFT marketplace Magic Eden saw a 38% decrease in active addresses, while Save, which offers collateralized lending, experienced a 42% drop in users over the same period. In comparison, the number of active addresses on Base, the Ethereum layer-2 blockchain, declined by just 2% over the same period. Even Ethereum’s base layer outperformed Solana, with the number of addresses engaging with DApps dropping by 17% over 30 days. This suggests that attributing SOL’s underperformance solely to the memecoin bubble burst is less plausible, as other networks did not experience a similar outcome.

Another factor limiting SOL’s upside potential is the lack of interest from leveraged traders. The funding rate on SOL perpetual futures has been negative for the past three days, meaning shorts (sellers) are paying to keep their positions open. The current negative 0.01% 8-hour funding rate is not particularly concerning, as it translates to a mere 0.9% cost per month. However, the lack of interest from leveraged buyers following a 52% drop from its all-time high is not a positive sign for traders’ sentiment. On the other hand, unexpected news, such as the potential approval of