Solana (SOL) has been in a steady downtrend for the past 3 months, but some traders believe that it may have bottomed at $26.80 on Oct. 21. Lately, there’s been a lot of speculation on the causes for the underperformance and some analysts are pointing to competition from Aptos Network.
The Aptos blockchain launched on Oct. 17 and it claims to handle three times more transactions per second than Solana. Yet, after four years of development and millions of dollars in funding, the debut of the layer-1 smart contract solution was rather unimpressive.
It is essential to highlight that Solana presently holds an $11.5 billion market capitalization at the $32 nominal price level, ranking it as the seventh largest cryptocurrency when excluding stablecoins. Despite its size, SOL’s year-to-date performance reflects a lackluster 82% drop, while the broader global market capitalization is down 56%.
Unfortunate events have negatively impacted SOL’s price
The downtrend accelerated on Oct. 11 after a leading decentralized finance application on the Solana Network suffered a $116 million hack.
Mango Markets’ oracle was attacked due to the low liquidity on the platform’s native Mango (MNGO) token which is used for collateral. To put things in perspective, the hack represented 9% of Solana’s total value locked (TVL) in smart contracts.
Other negative news emerged on Nov. 2 as German data center operator and cloud provider Hetzner started blocking crypto-related activity. The company’s terms of service prohibit customers from running nodes, mining and farming, plotting and storing blockchain data. Still, Solana nodes have other cloud storage providers to choose from, and Lido Finance confirmed that the risk for their validators had been mitigated.
A potentially promising partnership was announced on Nov. 2 after Instagram integrated support for Solana-based NFTs, allowing users to create, sell and showcase their favorite digital arts and collectibles. SOL immediately reacted with a 5.7% pump in 15 minutes but retraced the entire movement over the next hour.
To get a more granular view of what is going on with SOL price, traders can also analyze Solana’s futures markets to understand whether the bearish newsflow has affected professional traders’ sentiment.
Derivatives metrics show an unusual degree of apathy
Whenever there is relevant growth in the number of derivatives contracts currently in play, it usually means more traders…
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