Solana prices have fallen more than 30% since late November

Solana prices have suffered some notable declines recently, falling more than 30% since reaching all-time highs in late November.

The value of SOL, the native token of the high-throughput Solana platform, approached $175.00 on December 20, according to Coinbase data from TradingView.

At this point, the digital currency has fallen approximately 32% since reaching an all-time high of over $257.00 on November 22, additional Coinbase figures from TradingView revealed.

Since then, the cryptocurrency has recovered somewhat, but has been unable to regain most of what it lost since late November, trading near $185 at the time of this writing.

Market analysts have offered several possible explanations for this weakness in the SOL token, including a health boost and more serious concerns about decreased activity on the token’s native platform.

“Solana has been in a downtrend since it broke the 2021 all-time high of $260 with a swing high of $263.83 on the November 22, 2024 weekly,” the TikTok influencer who goes by Wendy O confirmed via email comments.

“This could be due to Bitcoin being unable to sustain $100,000 or due to the conclusion of 2024, traders and investors taking profits before 2025 or markets generally cooling down as some uncertainty comes into Q1 2025 as we expect new management.” .

Uncertain political outlook

The analyst noted that although the re-election of former President Donald Trump boosted cryptocurrency markets, there are many uncertainties surrounding what exactly will happen when he returns to the Oval Office.

Earlier this month, Trump revealed that he intends to nominate Paul Atkins, who previously served as commissioner of the US Securities and Exchange Commission, to a top job at the government agency.

Atkins, who currently serves as CEO of consulting firm Patomak Global Partners LLC, is expected to take a more pro-business approach to regulation than current SEC Chairman Gary Gensler, who has made headlines for his aggressive approach toward cryptocurrency/blockchain industry participants. .

Low network activity

One analyst in particular highlighted the sharp change in activity the Solana network has seen over the past few weeks.

“Since the end of November, Solana has seen a significant decline in both network activity (daily transactions have nearly halved since November 20) and TVL (total value locked) in its DeFi applications,” Alex Lin, co-founder and general partner at the venture capital firm Paraphrasehe wrote via email.

“The decline in network activity is likely attributable to the changing narrative around Solana itself with newer or alternative platforms like Hyperliquid taking the majority of the mindshare for performance and innovation,” he said, referring to the decentralized exchange, which has managed to generate significant visibility.

“Hyperliquid promotes itself as the blockchain to accommodate all finance, and has recently seen inflows of over $1 billion to the tune of $3.2 billion in TVL since launching its native token last month despite significant centralization concerns,” Lin said.

Additionally, he emphasized that “Solana is more sensitive to market sentiment changes compared to BTC or ETH as its growth in 2024 can be attributed to more speculative activities linked to its ecosystem such as memcoins and high-leverage trading.”

Healthy unification

The analyst also offered a separate, more neutral, potential explanation for the recent declines in the SOL token.

“Solana’s price may have been disproportionately affected by market conditions historically and is now experiencing a healthy correction,” Lin noted.

Tim Enneking, Managing Partner of psalmseems to be on the same page.

When asked what led to the recent decline in Solana prices, he said: “In this case, I think the answer is relatively clear: the markets, especially Solana, moved too far too quickly, and are now consolidating. This is actually a very healthy consolidation before the move.” Next up.”

Digging deeper into this matter, the author of this article inquired whether profit taking was the reason for this downward price movement, to which Enking replied “This is clearly part of the consolidation, as well as tax considerations (especially considering that the wash sale rule” does not apply to Cryptocurrencies).”

Disclosure: I own some Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS, and SOL.