Solana (SOL) fell 32% two months after last November, underperforming the overall altcoin market. During the same period, major altcoins averaged only a 21% decline, raising concerns among investors about SOL's relative weakness. Notably, despite recent inflows into SOL spot ETFs and increased corporate holdings, the price recovery lacks momentum, and market vigilance regarding slowing network demand is intensifying.
The weakness of SOL is evident in aspects such as the decline in trading fees and the decrease in decentralized application (DApp) revenue. This is interpreted as a signal of declining usage of the Solana network. In the past month or two, liquidity has been actively shifting to major Layer 2 blockchains like Base, Arbitrum (ARB), Polygon (MATIC), and BNB Chain, which also puts pressure on Solana's market share.
Some experts hold a low expectation for SOL's rebound in the short term. Analysis suggests that unless accompanied by a recovery in overall platform demand, expansion of the DApp ecosystem, and increased user participation, any price rebound will likely struggle to gain sustained momentum.
On the other hand, institutional interest continues. Some publicly listed companies hold SOL as part of their asset management strategy, and the inflow of ETF funds into the market also shows its potential. However, the general view is that these supply and demand factors are still insufficient to lead to a price reversal.
For SOL to reopen an upward trend, it must rely on a recovery in overall network demand. Improvements are needed across various aspects, including increased trading volume and fee income, as well as expansion of DApp users.
Article Summary by TokenPost.ai
🔎 Market Interpretation
The relative weakness of SOL stems from reduced network usage and declining profitability, compounded by intensified competition with Layer2 chains.
💡 Strategy Highlights
Focus should be prioritized on the recovery of the platform's fundamentals rather than a short-term rebound. The growth potential of DApps and user expansion capability are key indicators.
📘 Terminology Explanation
DApp (Decentralized Application): A distributed application based on blockchain, running on specific platforms, helping to increase transaction fees and network usage.
SOL: The native token of the Solana network, serving multiple functions such as executing transactions, staking, and paying fees.
Layer2: An independent scaling structure outside the main blockchain, advantageous for its fast transaction speeds and low fees.
TP AI Considerations
This article uses the TokenPost.ai foundational language model for summarization. The main content may be omitted or deviate from the facts.
