Solana’s native token SOL dropped 6% after getting rejected at $147 on Thursday. Investors became more risk-averse following the release of weak US job market data and soft consumer sentiment.
Traders worry it may take longer than expected for SOL to revisit the $200 mark, especially after leverage traders were wiped out in October and November, while Solana network activity continues to decline.
Solana’s total value locked (TVL) fell to $10.8 billion from $13.3 billion two months earlier. Several of the ecosystem’s top projects, including Kamino, Jupiter, Jito and Drift, saw deposit declines of 20% or more. Adding to the pressure, trading activity on Solana decentralized exchanges (DEX) also dropped sharply.
Even so, Solana kept its position as the second-largest network by TVL. Ethereum, however, remained dominant with $73.2 billion in deposits. Its layer-2 ecosystem—featuring Base, Arbitrum and Polygon—continues to attract meaningful capital. Ethereum’s Fusaka upgrade on Wednesday improved scalability and wallet management, reducing incentives for users to migrate funds to competing networks such as Solana.
Solana DEX volumes reached $19.2 billion in the seven days ending Nov. 30, a 40% drop from the $32 billion recorded four weeks earlier. With reduced onchain activity, investors fear weaker demand for SOL, creating a potential feedback loop as traders leave the Solana ecosystem in search of better opportunities. The newly launched layer-1 blockchain, Monad, for example, posted $1.2 billion in DEX volumes during its first week.
Layoffs and Tighter Consumer Credit Add Pressure to SOL Sentiment
SOL traders also reacted to a report from Global outplacement firm Challenger, Gray & Christmas, citing 71,321 corporate layoffs in November, a level seen only twice since 2008. Further uncertainty arose from the consumer financing sector after multiple US State Attorneys General offices requested details from “Buy Now, Pay Later” providers regarding consumers’ ability to repay those loans.
A PayPal survey showed that half of shoppers plan to take personal loans during the holiday season, raising concerns about tightening credit conditions.
Demand for bullish leverage in SOL futures remains very low, with the annualized funding rate at 4%, below the neutral 6% mark. Part of this weak conviction stems from the lack of inflows into Solana exchange-traded products. According to a Dec. 1 CoinShares report, Bitcoin, Ethereum and XRP ETPs saw a combined $1.06 billion in inflows over the same period.
Other altcoins, such as XRP, Litecoin, and Dogecoin, recently had their spot ETFs approved in the US, creating new competition for institutional flows. Several other Solana competitors are expected to receive spot ETF approvals in the coming months.
The bearish momentum has also reduced the odds of listed companies issuing new shares to grow their SOL reserves. Forward Industries (FWDI US), for instance, holds 6.91 million SOL, which are currently trading below its initial investment, according to CoinGecko data. Issuing shares at prices that imply a SOL cost below their reserve level would dilute existing shareholders’ claim on those holdings.
SOL’s path back to $200 depends heavily on reduced macroeconomic uncertainty, but SOL bears might be taken by surprise as traders expect governments to adopt stimulus measures, which could provide the catalyst needed for a broader altcoin rally.