Solana experienced a 6% pullback after getting rejected at $147 recently. Investors are showing greater risk aversion due to new spot altcoin ETFs and labor market weakness. Solana’s price struggles to maintain its key support amidst a volatile and uncertain market.
The total value locked in the network fell from $13.3 billion to $10.8 billion in two months, reflecting significant outflows. Leading protocols like Kamino and Jupiter saw deposit drops exceeding 20%. Trading activity on decentralized exchanges plummeted drastically during this critical period.
Weekly DEX volumes closed on November 30 at $19.2 billion marking a 40% monthly drop. This reduction suggests that traders are looking for opportunities outside the current ecosystem. Furthermore, the launch of the Monad blockchain with $1.2 billion in its first week worsens the competitive landscape for the Solana network currently.
On the other hand, the macroeconomic environment presents significant obstacles to price recovery. A recent report revealed 71,321 corporate layoffs in November an alarming level rarely seen since 2008. Thus, consumer financial uncertainty is limiting the flow of capital into risk markets in the short term.
Likewise, a PayPal survey indicated that half of shoppers plan to take out personal loans during the current holiday season due to lack of liquidity. US regulators are also scrutinizing credit providers. Therefore, market sentiment is negatively affected by these tight credit conditions.
Is an imminent recovery possible amidst the flight of institutional liquidity?
Demand for bullish leverage in futures remains unusually low with rates at 4%. CoinShares reported that Bitcoin and XRP products attracted $1.06 billion in inflows during the same period leaving Solana behind. The recent approval of new spot altcoin ETFs for direct rivals diverts institutional attention. Consequently, companies like Forward Industries face difficulties justifying new share issuances.
Finally, the path to $200 depends on an improvement in global conditions. However, bears could be surprised if governments implement fiscal stimulus measures. It is expected that a government liquidity injection could act as the catalyst needed for a broader rally in the crypto sector.
