Solana’s native token, SOL, dropped to $131.90 on February 25 — its lowest level in five months. This unexpected price correction triggered over $129 million in liquidated long futures positions. Although SOL briefly recovered to $140, it has still declined by 17% since February 22, underperforming the broader altcoin market, which saw an average drop of 10% during the same period.
Several interconnected factors point to continued near-term weakness for Solana, including declining on-chain activity, bearish derivatives indicators, and rising inflationary pressures within the network. Understanding these dynamics is crucial for investors assessing whether this dip is a buying opportunity or a sign of deeper structural challenges.
Declining On-Chain Activity Signals Reduced Network Demand
One of the most telling signs of weakening investor confidence in Solana is the sharp decline in on-chain activity across its decentralized applications (DApps). Over the past seven days, trading volume on Solana-based decentralized exchanges (DEXs) has fallen by 30%, reaching its lowest level since October 2025.
Meteora, a leading liquidity protocol on Solana, experienced the steepest drop, with on-chain activity down 48% week-over-week. Raydium, another major DEX, saw a 28% decline. Even meme coin launchpad Pump.fun — often seen as a barometer of retail speculation — reported a 35% reduction in transaction volume.
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In contrast, Ethereum-based DEX volumes surged by 40% during the same period, highlighting a notable shift in capital and user engagement toward alternative ecosystems. This divergence suggests that traders are reallocating funds from high-volatility platforms like Solana to more stable and mature networks.
The slowdown isn’t limited to trading platforms. Broader DApp usage across categories such as liquid staking, yield strategies, gambling dApps, NFT lending, and Web3 infrastructure has also contracted. For instance:
- Jito, a key liquid staking provider, saw active addresses fall by 49%
- Fragmetic’s user base dropped by 30%
- Save protocol usage declined by 28%
This widespread pullback indicates that the downturn extends beyond speculative meme coin cycles and reflects broader ecosystem fatigue.
Bearish Derivatives Market Sentiment
Derivatives markets offer valuable insights into trader sentiment and positioning. In Solana’s case, recent data paints a grim picture.
Futures markets for SOL have entered contango reversal, with contracts now trading at a discount to spot prices — a condition known as backwardation. Normally, longer-dated futures trade at a premium of 5%–10% due to carry costs and bullish expectations. However, on February 24, SOL futures flipped into negative territory, signaling growing bearish sentiment and increased short-side demand.
CoinGlass data reveals that total open interest in SOL futures fell from 31.6 million SOL on February 24 to 28.9 million SOL the following day — an 8.5% drop. This contraction suggests traders are either closing long positions or being forcibly liquidated amid volatility.
Low open interest combined with declining premiums indicates weak institutional and retail appetite for leveraged exposure to SOL. Without strong futures demand, sustained price recovery becomes unlikely in the short term.
Inflationary Pressures and ETF Uncertainty Weigh on SOL
Another critical factor affecting Solana’s price outlook is the potential delay or rejection of a Solana-based spot ETF in the United States. While Ethereum ETFs have gained regulatory approval, similar applications for SOL remain uncertain.
Market participants had hoped that a green light from U.S. regulators would unlock institutional inflows and boost credibility. However, recent developments have dampened those expectations:
- The Bybit exchange hack in early 2025 raised concerns about exchange security and custody standards
- OKX’s settlement with the U.S. Department of Justice highlighted ongoing regulatory scrutiny over exchange operations
These events have indirectly impacted investor confidence in Solana-linked financial products, particularly ETFs. As a result, speculation around a near-term approval has faded, reducing one of the primary catalysts that could have driven price appreciation.
Additionally, Solana’s inflation model continues to pressure token value. With new SOL tokens continuously minted to reward validators and stakers, supply growth outpaces demand unless network usage accelerates significantly. Given current declines in activity, this imbalance may persist, further limiting upside potential.
FAQ: Addressing Common Investor Questions
Q: Why is Solana underperforming other altcoins?
A: SOL's underperformance stems from declining on-chain activity, weak derivatives sentiment, and fading hopes for a U.S.-listed spot ETF. Unlike Ethereum, which benefits from stronger institutional adoption and stable DApp usage, Solana relies heavily on speculative retail activity — which has recently cooled.
Q: Is the drop in meme coin activity affecting Solana’s ecosystem?
A: Yes. While meme coins are speculative, they drive significant transaction volume and fees on Solana. Platforms like Pump.fun contribute to network vitality. A 35% drop in their volume reflects reduced user engagement and lower fee generation — both negative signals for network health.
Q: Can Solana recover without an ETF approval?
A: Recovery is possible but likely slower. ETF approval would bring institutional capital and mainstream visibility. Without it, SOL must rely on organic growth through improved scalability, developer adoption, and real-world use cases — all of which take time.
Q: What metrics should I watch to gauge Solana’s rebound potential?
A: Monitor DEX trading volumes, active addresses on major DApps (like Jito and Raydium), futures open interest, and funding rates. A sustained uptick in these indicators would signal renewed market confidence.
Q: How does inflation impact SOL’s price?
A: Solana mints new tokens annually to incentivize network participation. If demand doesn’t grow proportionally, increased supply exerts downward pressure on price. Currently, falling usage means inflation isn’t being absorbed effectively.
What’s Next for Solana?
Given the confluence of reduced on-chain activity, bearish derivatives trends, inflationary supply dynamics, and dimming ETF prospects, Solana faces an uphill battle to regain momentum.
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For a recovery to take hold, the ecosystem needs either:
- A resurgence in DApp innovation and user adoption
- A major regulatory catalyst (e.g., ETF approval)
- Strategic partnerships that drive real-world utility
Until one or more of these occur, SOL may remain range-bound or face further downside risk.
Core Keywords Integration
This analysis integrates key SEO terms naturally throughout:
- Solana price – Central theme addressed in performance review and outlook
- SOL token – Referenced in context of supply dynamics and market behavior
- Solana ETF – Discussed as a potential catalyst and current uncertainty
- on-chain activity – Used to evaluate ecosystem health across DEXs and DApps
- futures market – Explored through open interest and contango/backwardation trends
- decentralized exchanges (DEX) – Highlighted via volume comparisons between Solana and Ethereum
- inflation pressure – Explained in relation to tokenomics and price sustainability
These keywords support search visibility while maintaining natural readability.
Final Thoughts
Solana’s current downturn reflects more than just market-wide corrections — it signals structural challenges within its ecosystem. While the network remains technologically robust with high throughput and low fees, user engagement and speculative energy have waned.
Investors should remain cautious until clear signs of recovery emerge across on-chain metrics and derivatives markets. In volatile environments like this, having access to reliable data and secure trading infrastructure is essential.
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