The cryptocurrency market is once again showing signs of fragility—and at the centre of this concern lies Solana (SOL), a blockchain ecosystem previously marked by rapid growth and high expectations. Recent data points to a sustained weakening of on-chain activity and a cooling of retail interest—raising meaningful questions about SOL’s near-term trajectory.
Declining On-Chain Engagement
One of the starkest indicators of stress comes from the drop in active addresses on Solana’s network. According to data compiled by DeFiLlama, in the week ending 19 October the number of active wallets (sending or receiving transactions) stood at approximately 4.74 million—a sharp fall from around 33.63 million in the period 19-25 May.
This moribund activity suggests that network usage is waning. When fewer users actively engage with a blockchain—whether by transacting, interacting with dApps or participating in its ecosystem—the demand driver for its native token comes under pressure. For Solana, that means less transactional utility, fewer incentives for developers and a potentially reduced appeal for investors.
Weakening Derivatives and Retail Sentiment
The trouble doesn’t end with on-chain data. The derivatives market for SOL also displays weakening signals. Total open interest (OI) for Solana futures has dropped from around USD 15 billion earlier in October to about USD 8.64 billion as of late October.
Open interest reflects the amount of outstanding derivative positions. A sustained decrease can indicate that traders are reducing their exposure, which often precedes price declines. Alongside this, the funding rate—a metric showing how much longs pay shorts (or vice-versa)—has dipped into negative territory (around -0.0001%) as bearish positioning grows.
In short: both the on-chain (real-world usage) lens and the derivatives (trader sentiment) lens are flashing yellow for Solana.
Technicals Show a Bearish Bias
From a charting perspective, Solana is under pressure:
-
As of the writing, SOL is trading below its 200-day exponential moving average (EMA), around the USD 186 level. Trading below this key long‐term average is often viewed as a signal of dominant bearish trend.
-
The MACD (Moving Average Convergence Divergence) indicator is generating a sell signal. Should the price break and close below the 200-day EMA, a further downside risk of around 6 % is possible, with USD 174 being the next major support zone to watch.
If momentum shifts, upside triggers could include a bullish MACD crossover to capture knock-on effects, with resistance around USD 190 and then USD 200. But for now the bears seem better positioned.
What Are the Key Risks and Implications?
Putting the pieces together, Solana faces several interconnected risk vectors:
-
Reduced network usage means less value captured by the chain, fewer active applications and reduced attractiveness for both developers and users.
-
Diminished retail and trader interest (as seen through derivatives flows) signals that participants may be stepping back, reducing liquidity and heating up volatility.
-
Technical vulnerability implies that if the positive scenarios fail to trigger, the path of least resistance may be downward.
Investors in SOL should be aware of these risks. Even though Solana retains strong brand recognition and underlying infrastructure advantages (high throughput, low fees, active developer ecosystem), the current sentiment and data point to caution. Without fresh catalysts—such as major dApp launches, turnkey institutional adoption, or a broader crypto market upswing—Solana’s reverberations from these headwinds could intensify.
Final Thoughts
While Solana still carries significant potential in the longer term, the short to medium-term picture is clouded by weakening fundamentals and bearish technicals. For holders and prospective entrants, the prudent approach may be to watch for either a contrarian bounce supported by improving on-chain metrics or tighten risk management in the absence of that positive shift.
As always, this is not investment advice—due diligence is critical, especially in a market as fast‐moving and speculative as crypto.
Ready to start your cryptocurrency journey?
If you’re interested in exploring the world of crypto trading, here are some trusted platforms where you can create an account:
- Binance – The world’s largest cryptocurrency exchange by volume.
- Bybit – A top choice for derivatives trading with an intuitive interface.
- OKX – A comprehensive platform featuring spot, futures, DeFi, and a powerful Web3 wallet.
- KuCoin – Known for its vast selection of altcoins and user-friendly mobile app.
These platforms offer innovative features and a secure environment for trading and learning about cryptocurrencies. Join today and start exploring the opportunities in this exciting space!
Want to stay updated with the latest insights and discussions on cryptocurrency?
Join our crypto community for news, discussions, and market updates: CryptoBCC on Telegram.
For collaborations and inquiries: CryptoBCC.com@gmail.com
Disclaimer: Always do your own research (DYOR) and ensure you understand the risks before making any financial decisions.
