Solana price and Solana’s fees on its network have fallen drastically, while volume on leading platforms such as Magic Eden and Jito has been cut.
Leveraged investors are not taking long on SOL, and its futures funding rate remains in the negative, reflecting bearish sentiment.
World Liberty Financial, a firm owned by Donald Trump, has invested in several cryptocurrencies but not in Solana, which is a cause of worry for investor trust.
Solana price has not been doing great recently, but the reasons why it has been going down are in line with the rest of the crypto universe. Since its low of $125 on February 28, Solana price has gone up 17% to $145. It is still, though, down 50% from its all-time high of $295 during January, and that bothers traders.
Solana price declining blockchain usage
One of the major concerns for SOL is the decrease in the use of blockchain, with network fees dropping 73% in the past month. Much of the recent movement was due to memecoin launches and decentralized trading, but when that tapered off, so did SOL.
Active user bases on top Solana based applications such as Jito and Magic Eden have collapsed. Ethereum and its layer-2 solution Base have fared better, and that suggests that Solana’s failure is more than the memecoin bust.
One issue that SOL is facing at present is the absence of interest from traders who are employing leverage. Solana price on perpetual futures funding rate has been negative in the past few days, where buyers are paying sellers to hold an open position.
Although the funding rate is not very high, it reflects bearish sentiment on the part of buyers. But unexpected twists and turns such as the approval of a Solana-based ETF, in the United States, can turn the picture around and lead to a price increase.
Concerns also exist regarding the utilization of Solana’s network. Reports state that 1.3% of users make 95% of fee payments, led by market-making firms and trade bots. A few critics blame this for fostering unfair trading by facilitating sandwich attacks, where there is manipulation by traders for profit-making purposes.
Failed to show real investment interest
Solana’s woes are also attributed to World Liberty Financial, which is connected to Donald Trump’s personal wealth. The company has invested in Ethereum, Bitcoin, Tron, and others.
But they have not included such an option for Solana even after the release of the Official Trump memecoin on Solana’s blockchain. This move saw many wondering if Solana holds a central position among other significant investors.
For SOL to return to its bullish state, four issues need to be corrected: greater activity on the blockchain, more leveraged investors, fewer trading bots, and greater interest from big investment projects. If these are corrected, SOL may be able to rebound and trend up to its highs
