Important takeouts:
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While Solana Network’s activities and fees have fallen, Sol’s ETF expectations maintain investors’ interest in SOL.
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Validator revenue sustainability and staking inflation are risky, but institutional influx can promote Solgain.
Solana’s native token Sol (Sol), surged 10.5% after testing the $191 level on Friday. Even with this rebound, the token price will fall by 10% over the past two weeks, taking over rival ether (ETH) and BNB (BNB). Traders are currently assessing the possibility that Sol is back at $250 to understand the factors behind the decline in performance.
Investor sentiment improved over the weekend after US President Donald Trump signaled his intention to avoid shutting down non-essential federal agencies. However, according to Yahoo Finance, Congress has put “unpredictable and immediate economic ripples” at risk, as it has not secured the 60 votes needed to pass a temporary funding bill by Tuesday.
Meanwhile, Gold hit an all-time high of $3,833 on Monday, highlighting continued uncertainty about the outlook for the US fiscal debt. Even if lawmakers sign short-term contracts, the Treasury will have to pay more than $1 trillion in interest per year. This expansion between government revenue and spending is pushing savers towards rare assets, including cryptocurrencies.
The broader cryptocurrency market recorded profits on Monday, but Sol was unable to hold the $212 level. Part of the investor’s complaints stems from declining activity across the Solana network.
According to Nansen data, Solana’s transactions have fallen by 10% over the past seven days, but fees have fallen by nearly 50%. In contrast, several competitors recorded significant increases, including 56% fees in the BNB chain, while Arbitrum and HypereVM have more than doubled their fee revenues from the previous week.
Edgex hurts solutions, while hiperliquid, Aster surges the lasting future
The rapid expansion of synthetic permanent futures on high lipids, Aster, and Edgex also hampers feelings about SOL. As Solana once led decentralized exchange activities through platforms such as Meteora, Raydium and Pump, many Sol holders overestimated the network’s competitiveness in terms of fees and user experience.
Hyperliquid chose to launch its own chain to reduce fees and eliminate the maximum extractable value (MEV) of the validator. Aster, a project backed by YZI Labs (formerly Binance Labs), currently integrated with the BNB chain, is also planning to introduce its own Layer-1 network.
In the case of Sol Bulls, the most powerful catalyst for reverse Token’s misperformance is the expected approval of standard exchange trade funds (ETFs) by the US Securities and Exchange Commission (SEC). Regulators face the final deadline of October 10th, with analysts allocating odds of 95% or more to approval, fostering hopes for a significant influx for the first few months of the transaction.
Related: Aster considers the best schedule for recipients of token airdrops
Sol’s momentum also depends on how investors view native staking yields. Critics warn that Solana’s inflation poses risks given the network’s roughly 1,000 validators and its significant setup and operational costs.
According to X User ‘Boxmining’, 76% of Validator Income on the Solana network comes from newly issued coins, not from MEV or priority fees. This analysis raises questions about the sustainability of staking reward rates over the next few years.
Traders should not expect price drops based solely on weaker on-chain activities, as influx from companies accumulating SOL reserves and potential approvals for SOP ETFs could set the stage towards $250.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.