This article was first published on Deythere.
- Very Bearish Positioning In The Derivatives Markets
- DApps Revenue Declines to $22M; Lowest in 1.5 Years
- Over 80% Perpetual Volume Controlled by Hyperliquid and Rivals
- Strong TVL and Fees Can’t Counter Weak Sentiment
- Corporate Activity Puts Further Weight on Downside
- Conclusion
- Glossary
- Frequently Asked Questions About Solana Price Outlook
- Why is Solana price falling?
- What does $22M DApps revenue mean?
- Why are funding rates are at 0% important?
- How serious is competition posed by Hyperliquid?
- Is $80 a realistic target?
- References
Solana price outlook has become progressively more cautious as both price action and network data start to converge on the downside. Solana has fallen 11% in only three days, droping from around $97.70 down to around $87-$89 range; a move that caused nearly $25 million worth of leveraged long liquidations.
Meanwhile, deeper indicators point to this being more than a temporary correction. Solana’s on-chain activity has declined, and derivatives markets demonstrate a lack of bullish conviction.
As traders go defensive and ecosystem revenue fades, the current Solana price outlook now contains an increasing possibility of the $80 retest.
Very Bearish Positioning In The Derivatives Markets
Derivatives markets are sending the strongest signal about the Solana price outlook.
Solana perpetual futures funding rates have declined into the region of 0%, in fact little to no over-utilization on long positions. Under normal circumstances, funding rates typically linger around 9% annually as the market’s biased bullishness tends to show through.
Instead, demand for leverage has been overwhelmingly bearish in nature for over a month, contrary to the structure of crypto markets where traders are generally net-long. Options data confirms this shift.
The delta skew (put-call ratio) rose to 12%, indicating put options are more expensive than calls. This suggests whales and market makers are actively hedging downside risk rather than positioning for upside; despite SOL trading about 70% below its previous all-time high.
DApps Revenue Declines to $22M; Lowest in 1.5 Years
The main reason for the deteriorating Solana price outlook is a steep crash in network activity. Decentralized applications on Solana made $22 million in revenue, the lowest level in 18 months.
Revenue was $36 million two months prior, a clear sign of an ecosystem reduction. This fall indicates lower use of decentralized applications which is one of the main drivers of transaction fees and network activity.
The slowdown is not happening alone. On the BNB Chain, DApps revenue dropped 52% in the same period, revealing a wider sectoral weakness.
However, Solana’s challenge is increased by intensifying competition in high-leverage sectors.
Over 80% Perpetual Volume Controlled by Hyperliquid and Rivals
Solana retains its supremacy in decentralized exchange activity though it is losing momentum when it comes to derivatives which is one of crypto’s most active sectors.
More than 80% of overall perpetual futures trading volume is now run through all other dapps like Hyperliquid, as well as Edgex, Zklighter and Aster.
This matters as perpetual contracts are responsible for sizable liquidity and trading activity. The growth of Hyperliquid created even more pressure.
Last month, the platform released an officially licensed S&P 500 Index perpetual futures contract built by Trade[XYZ], adding to a total tokenized equities market worth just north of $1.1 billion in total assets. That is attracting traders that might have otherwise traded in an ecosystem like Solana.
Strong TVL and Fees Can’t Counter Weak Sentiment
Although the Solana price outlook turned bearish, aspects of its fundamentals remain strong. Solana has a total value locked (TVL) of $6.9 billion and BNB has TVL of $5.7 billion.
Network fee generation is also maintaining a lead. Solana had generated $20.8 million in fees over 30 days compared to BNB Chain’s $9.1 million which is more than double. But those strengths are not resulting in price support.
At $51 billion, Solana’s market capitalization is at a 42% discount to BNB’s at $88 billion.
This shows a disconnect between usage metrics and investor sentiment, an ongoing feature of the current cycle.
Corporate Activity Puts Further Weight on Downside
Based on reports, companies that embraced SOL-focused treasury strategies like Forward Industries (FWDI US) and DeFi Development Corp. (DFDV US), to name a few, are now underwater on their holdings.
When treasury allocations go into losses, it often diminishes the confidence and suppresses further buying pressure.
With weak DApps revenue and bearish derivatives data, this also adds caution to the market.
Conclusion
A combination of technical indicators is bringing a bearish Solana price outlook. The price has already fallen 11% in three days, resulting in $25 million liquidation. The derivatives markets shows defensive positioning from traders, with 0% funding rates and a 12% bearish skew.
DApps revenue, at $22 million, is down to its lowest level in 18 months and competition in derivatives especially from Hyperliquid is heating up.
While Solana still produces significant TVL and transaction fees, these positives are outweighed by activity on Solana decreasing, while sentiment is also weak.
Collectively, the data indicate that a break above $110 will take much longer than many had anticipated; which means the bar in terms of downside is now at a realistic near-term target of $80.
Glossary
Funding Rate: An amount transferred between holders of perpetual futures contracts that act as a sentiment indicator.
Delta Skew: An options metric that captures the balance of put and call demand.
Total Value Locked (TVL): The aggregate capital locked in an ecosystem’s DeFi layer.
Perpetual Futures: Derivative contracts without an expiration date.
DApps Revenue: Income from the usage and fees of decentralized applications
Frequently Asked Questions About Solana Price Outlook
Why is Solana price falling?
As a result of negative derivatives data, falling DApps revenues, and decreased trader confidence.
What does $22M DApps revenue mean?
It indicates the least on-chain activity since October 2021.
Why are funding rates are at 0% important?
They suggest poor demand for long positions and absent bullish attitude.
How serious is competition posed by Hyperliquid?
It accounts for over 80% of perpetual trading volume with other platforms like it.
Is $80 a realistic target?
Yes, as of now, there is pronounced downside risk according to current derivatives and on-chain data.
References
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