Will Solana price remain at $180 after weekly DApp volume drop of 30%?

Solana’s native token, SOL (SOL), failed to sustain levels above $200 after multiple rejections on December 25-26. The move was in line with the broader cryptocurrency market, which fell 3.5% in the two days to December 27. However, SOL underperformed with a correction of 5.1%, raising concerns among traders about the possibility of further price declines.

One of the main causes of concern is Solana’s on-chain network volume, which has decreased by 30% in 7 days.

Solana was the worst performer among the top 10 blockchains, despite ranking second in weekly trading volume at $20.9 billion. In comparison, Ethereum’s on-chain volume decreased by 15%, while Sui’s decreased by 8%. Additionally, the Ethereum ecosystem has solidified its lead considering layer 2 solutions such as Arbitrum, Optimism, Base, and Polygon.

Solana’s weekly DApp trading volume tracked by DefiLlama also reflected a negative trend. Highlights include a 39% decrease in Orca and Phoenix activity over a 7-day period, while Raydium activity decreased 30%. Of greater concern is that Solana’s memecoin, which was quite popular with new users, has performed poorly over a 30-day period. On-chain activities such as token launches, staking, and trading remain important drivers of SOL demand.

Among memecoins, Popcat fell 42% in the 30 days to December 27, Dogwifhat (WIF) fell 40%, and BONK fell 25%. On the other hand, the overall cryptocurrency market capitalization remained unchanged during the same period.

Notably, these modifications were not limited to the Solana-based memecoin, but Raydium’s recent success was closely tied to the Pump.fun memecoin craze. These challenges highlight the importance of maintaining on-chain activity to maintain SOL demand.

Solana Network’s total deposits, as measured by Total Fixed Value (TVL), reached 44 million SOL, the highest in two years. Platforms such as Binance Staked SOL, Jupiter, Drift, and Orca led the 16% monthly increase, according to DefiLlama data. On the downside, deposits for Jito, Sanctum, and MarginFi have decreased.

SOL futures demonstrate resilience despite price declines.

To assess whether professional traders have turned bearish on SOL, the derivatives market provides key insights. For example, monthly futures contracts typically trade at premiums of 5 to 10 percent per year on neutral markets. This premium compensates the seller for the longer payment term associated with that product.

Although lower than the 20% premium recorded on December 18, the current 10% premium is at the threshold of a neutral-to-bullish sentiment shift. Considering that the price of SOL fell 16% during the same period, the derivatives market is showing resilience.

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

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Over the past month, the SOL funding rate has remained below 0.015% (equivalent to 1.2% annually), indicating a neutral market. However, as interest rates turned negative on December 27, demand from leverage buyers (buyers) decreased. This change is concerning, considering that SOL has fallen 30% since its all-time high of $264.50 on November 20th.

Solana’s sharp decline in on-chain activity and declining interest in memecoins suggest a somewhat bearish outlook for SOL’s near-term price. Nonetheless, derivatives data suggests whales and market makers remain bullish, with downside risk limited below $180.