Originally published on: November 05, 2022
Solana, once a high-flyer in the crypto space, has been steadily declining over the last three months, with the price hitting a low of $26.80 on Oct. 21. While traders speculate on the reasons behind this underperformance, some analysts suggest that competition from Aptos Network could be a contributing factor.
Aptos Network, launched on Oct. 17, boasts the ability to handle three times more transactions per second than Solana. Despite years of development and significant funding, the debut of this layer-1 smart contract solution fell short of expectations.
Currently, Solana commands an $11.5 billion market capitalization at a $32 price level, making it the seventh largest cryptocurrency excluding stablecoins. However, SOL has experienced an 82% drop year-to-date, while the overall global market capitalization is down 56%.
The downturn intensified on Oct. 11 following a $116 million hack on a leading decentralized finance application on the Solana Network. Mango Markets’ oracle fell victim to the hack due to low liquidity on the platform’s native Mango token, representing 9% of Solana’s total value locked in smart contracts.
On Nov. 2, more negative news surfaced as German data center operator Hetzner began blocking crypto-related activities. Despite such challenges, Solana announced a promising partnership with Instagram for support with Solana-based NFTs.
To understand the dynamics behind SOL’s price movements, traders can delve into Solana’s futures markets. The total open interest on Solana futures has remained relatively stable at $440 million over the past 30 days, indicating sustained activity.
However, data suggests that Solana’s futures have been trading in backwardation, signaling a lack of interest from leverage buyers. While the reasons for this trend remain unclear, speculation abounds regarding the influence of Alameda Research, a major player in the crypto space.
Despite uncertainties surrounding Solana’s performance, market participants continue to monitor developments closely. As the broader cryptocurrency market evolves, the fate of SOL hangs in the balance, waiting for signs of strengthening.
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