Solana prices have fallen sharply since November 22nd.
Solana prices have suffered some notable declines recently, falling more than 30% since hitting an all-time high in late November.
According to Coinbase data from TradingView, SOL, the high-throughput native token of the Solana platform, approached $175.00 on December 20.
At that point, the digital currency had fallen about 32% since hitting an all-time high of more than $257.00 on November 22, according to additional Coinbase figures from TradingView.
The cryptocurrency has since recovered somewhat, but has failed to regain most of the ground lost since late November and is trading at around $185 at the time of writing.
Market analysts offered several possible explanations for this weakness in the SOL token, including healthcare consolidation and more serious concerns about bearish activity on the token’s native platform.
“Solana has been in a downtrend since breaking above its 2021 all-time high of $260 with a weekly swing wick high of $263.83 on November 22, 2024,” highlighted TikTok influencer Wendy O in emailed comments.
“This could be because Bitcoin is unable to maintain the $100,000 mark, or because 2024 is coming to an end, traders and investors are taking profits before 2025, or markets in general are cooling off , as there is some uncertainty in the first quarter of 2025 as we expect a new government,” she explained.
Uncertain political outlook
The analyst noted that while the re-election of former President Donald Trump has boosted cryptocurrency markets, there is a lot of uncertainty about what exactly will happen when he returns to the Oval Office.
Earlier this month, Trump announced he was nominating Paul Atkins, who previously served as commissioner of the U.S. Securities and Exchange Commission, to the government agency’s top job.
Atkins, who currently serves as CEO of consulting firm Pomak Global Partners LLC, is expected to take a more business-friendly approach to regulation than current SEC Chairman Gary Gensler, who is known for his aggressive approach toward cryptocurrency/blockchain industry participants made headlines.
Declining network activity
One analyst in particular highlighted the sharp changes in activity that the Solana network has experienced in recent weeks.
“Since late November, Solana has seen a significant decline in both network activity (daily transactions have almost halved since November 20) and TVL (Total Value Locked) across its DeFi applications,” said Alex Lin, co-founder and general partner at Venture capital firm Reforge wrote via email.
“The decline in network activity can most likely be attributed to the changing narrative surrounding Solana itself, with newer or alternative platforms such as Hyperliquid capturing most of the attention for performance and innovation,” he said, referring to the decentralized exchange , which has managed to generate significant visibility.
“Hyperliquid promotes itself as the blockchain that houses all finance and, despite major centralization concerns, has recently seen inflows of more than $1 billion and a TVL value of $3.2 billion since launching its native token last month -dollar recorded,” Lin said.
In addition, he emphasized that “Solana is more sensitive to changes in market sentiment compared to BTC or ETH, as its growth in 2024 is due to more speculative activities related to its ecosystem, such as memecoins and high-leverage trading.”
A healthy consolidation
The analyst also offered a separate and more neutral possible explanation for the SOL token’s recent declines.
“Solana’s price may have been disproportionately influenced by market conditions in the past and is now experiencing a sharp correction,” Lin noted.
Tim Enneking, managing partner of Psalion, seemed to agree.
When asked what triggered the recent drop in SOL prices, he replied: “In this case, I think the answer is relatively simple: the markets, and Solana in particular, have moved very far, very quickly, and are now consolidating.” This is actually a very healthy consolidation before the next rise.”
To explore this matter further, the author of this article asked whether profit-taking had caused this downward move in prices, to which Enneking replied: “That is clearly part of consolidation as well as tax considerations (particularly given that the wash sale rule does not apply). role plays). Not applicable to crypto.”
Disclosure: I own Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS and SOL.
