Solana (SOL) price not recovering fast? Here are 3 influencing factors! (2/26/25)

Jakarta, Pintu News – The price of the Solana native token SOL->Current SOL PriceRp 0Market Cap-Trading Volume-Circulating Supply- experienced a significant drop on February 25, 2025, reaching its lowest point in five months at $131.90 (IDR 2,150,981.70). This drop caught many investors by surprise and triggered the liquidation of over $129 million in leveraged SOL futures long positions.

Although the price had a temporary recovery to $140 (IDR2,282,200), SOL is down around 17% since February 22, while the broader altcoin market is down around 10%. There are several factors that explain why it is difficult for Solana’s price to rebound quickly.

1. The Decline in Onchain Activity and Its Impact

One of the main factors causing Solana’s price to struggle is the decline in onchain activity on the Solana network. In the last seven days, the volume of transactions on the decentralized exchange (DEX) on the Solana network decreased by 30%, reaching its lowest level since October 2024. Platforms like Meteora recorded a 48% decline, while Raydium saw a 28% drop in activity. This suggests that interest in decentralized applications (DApps) running on the Solana network is declining.

In comparison, DEX transaction volume on Ethereum actually increased by 40% over the same period, while several other networks such as Pendle and Hyperliquid saw significant volume increases. This decline in DEX activity illustrates the reduced use of Solana for decentralized transactions and applications, which in turn affects the short-term attractiveness of the Solana ecosystem.

Also Read: Senator Dick Durbin Introduces Legislation to Stop Fraud at Crypto ATMs

2. Inflation and Validator Costs: Solana Economic Challenges

The Solana ecosystem also faces economic challenges related to the cost of running validators and the inflation associated with SOL tokens. The annual cost of running a Solana validator can be over $72,000 (IDR 1,176,000,000), not including server costs and daily “voting costs” which are around 1 SOL. These costs affect the profitability of the validator, especially in difficult market conditions.

On the other hand, SOL staking is also having problems, with the current staking yield standing at 9.5% according to StakingRewards. However, when adjusted for inflation, the yield is actually much lower. Over 16.1 million SOL tokens are expected to be unlocked between February and May 2025, which represents an annual inflation rate of around 10%. This creates additional pressure on SOL staking, which in turn may reduce the long-term attractiveness of Solana.

3. Declining Derivatives Demand and Dwindling ETF Opportunities

In the derivatives market, demand for long (buy) leveraged Solana futures has also declined sharply, hitting its lowest point in more than 12 months. Data shows that the monthly futures contract, which usually trades at a 5% to 10% premium compared to the spot market, has entered backwardation since February 24. This indicates that demand for short positions is higher than long positions, reflecting low expectations of potential SOL price increases in the near term.

In addition, the chances of a Solana spot exchange-traded fund (ETF) being legalized in the US are also dwindling, which contributes to the decline in investor interest in SOL futures. Hackers attacking the Bybit exchange and a legal settlement with OKX in the US have also been deterring factors for investors to further engage in the Solana market.

Solana’s Prospects: It Takes Time to Rise

Overall, while Solana was once one of the more promising networks in the cryptocurrency space, there are currently many factors that stand in the way of the SOL price returning to bullish momentum. Declining onchain activity, inflationary pressures, high validator fees, and weak derivatives demand all create an unfavorable market environment for Solana in the short term.

While there is a possibility of price recovery in the long run if market conditions change, investors need to be cautious and consider such factors before making an investment decision. Solana’s long-term prospects may still be affected by how the ecosystem and network adoption evolve in the future.

Also Read: 3 Factors Causing the 50% Drop in Solana (SOL) Price from All-Time Highs

That’s the latest information about crypto news today. Get more information about crypto academy from beginner to expert level only at Pintu Academy and enrich your knowledge about the world of crypto and blockchain.

Follow us on Google News to get the latest information about crypto and blockchain technology. Enjoy an easy and secure crypto trading experience by downloading Pintu Crypto via Google Play Store or App Store now.

Experience web trading with advanced trading tools such as pro charting, various order types, and portfolio tracker only at Pintu Pro. Click Register Pintu if you don’t have an account or click Login Pintu if you are already registered.

*Disclaimer

This content aims to enrich readers’ information. Pintu collects this information from various relevant sources and is not influenced by outside parties. Note that an asset’s past performance does not determine its projected future performance. Trading crypto carries high risk and volatility, always do your own research and use cold hard cash before investing. All activities of buying andselling Bitcoin and other crypto asset investments are the responsibility of the reader.

Reference:

• Cointelegraph. Solana Price Unlikely to Bounce Back Quickly: Here’s Why. Accessed February 26, 2025.
• Featured Image: VALR Blog