Solana on-chain metrics suggest another price plunge on the horizon

Solana’s price has taken a big hit following the collapse of FTX, and investors are wondering if the bottom has been reached. It’s no secret that Solana had ties to Sam Bankman-Fried and FTX, which

While many cryptocurrencies managed to chart relief rallies after being battered by the collapse of FTX, the price of SOL remained bearish. Solana was one of the biggest underperformers in the crypto space in November 2022.

SOL price performance in November has been capped by bears, but can it make one final push before the end of the year?

Retailers wary of SOL

From the November peak of $38.79, Solana’s price has fallen a further 65% and is currently trading at $13.50.

Furthermore, the daily trading volume was down 25% from the previous day, to around $220 million at press time. Since the drop in FTX, there has been a big drop in retail interest and trading volume for SOL.

Solana Trade Volume |  Source: Sentiment
Solana Trade Volume | Source: Sentiment

Trading volume is currently sitting at a monthly low. And while the Solana spot market was looking largely barren, the futures markets weren’t faring much better.

On December 2, Solana’s open interest fell 1.25% to $208.9 million.

Solana Open Interest |  Source: Coinage
Solana Open Interest | Source: Coinage

Funding rates were still negative, meaning that traders with short positions were dominant and willing to liquidate long positions. This is generally a sign of a bearish trend.

In addition, there were long liquidations of approximately $207,000 and short liquidations of $89,000 in the last 24-hours. More long liquidations are another clear sign of a bearish trend.

SOL Liquidation Statistics |  Source: Coinage
SOL Liquidation Statistics | Source: Coinage

Low social interest drives down value in Solana

Social metrics didn’t show any major growth for Solana. Social volume is declining while weighted social sentiment was still in negative territory.

Solana Social Metrics |  Source: Sentiment
Solana Social Metrics | Source: Sentiment

The negative weighted social sentiment indicated low demand for SOL in the market. In addition, recent NFT data from Messari showed that the Solana landscape was the worst affected by bears with respect to that specific area.

Solana NFTs saw a 48% drop in sales, the biggest drop in sales compared to its peers like Ethereum and Polygon.

A positive on-chain trend for SOL was its development activity picking up steam, which could potentially boost investor confidence.

Solana Development Activity |  Source: Sentiment
Solana Development Activity | Source: Sentiment

Nonetheless, with everything else tilted bearish, there is only so much the developers can do to further propel the price action. The overall outlook for Solana suggests a protracted recovery, with the bears still dominating the bulls in the near term.

The psychological resistance at $20 could play a crucial role in confirming the SOL price recovery. If the bearish price action continues, the price could decline below the $10 level.


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