Solana prices have plunged more than 30% since late November

Solana prices have suffered notable declines recently, falling more than 30% since reaching an all-time high in late November.

SOL, the native token of broadband platform Solana, approached $175.00 on December 20, according to Coinbase data from TradingView.

At this point, the digital currency was down about 32% since hitting an all-time high of over $257.00 on November 22, additional Coinbase figures from TradingView reveal.

Since then, the cryptocurrency has recovered somewhat, but it has failed to regain most of the ground lost since late November, trading near $185 at the time of writing.

Market analysts have offered several potential explanations for this weakness in the SOL token, including consolidation in health and more serious concerns about declining activity on the token’s native platform.

“Solana has been in a downward trend since breaking the all-time high of $260 in 2021 with a high of $263.83 on the week of November 22, 2024,” highlighted the TikTok influencer who goes by the name Wendy O in emailed comments.

“This could be due to Bitcoin’s inability to sustain $100,000 or the end of 2024, traders and investors taking profits before 2025 or markets cooling in general as some uncertainty arises at the first quarter 2025 as we expect a new administration,” she said.

Uncertain political prospects

The analyst pointed out that although the re-election of former President Donald Trump has strengthened cryptocurrency markets, many uncertainties remain about what exactly will happen when he returns to the Oval Office.

Earlier this month, Trump revealed that he planned to nominate Paul Atkins, former commissioner of the U.S. Securities and Exchange Commission, to the government agency’s top job.

Atkins, who is currently CEO of consulting firm Patomak Global Partners LLC, is expected to take a more business-friendly regulatory approach than current SEC Chairman Gary Gensler, who has made headlines for his aggressive approach toward players in the cryptocurrency/blockchain industry.

Network activity down

One analyst notably highlighted the strong change in activity experienced by the Solana network in recent weeks.

“Since late November, Solana has seen a marked decrease in both network activity (daily transactions have almost halved since November 20) and TVL (total value locked) in its DeFi applications,” Alex Lin, co-founder and general partner of venture capital. farm Reforgewrote by email.

“The decrease in network activity can most likely be attributed to the changing narrative around Solana itself, with newer or alternative platforms like Hyperliquid capturing the majority of minds for performance and innovation,” he said, referring to the decentralized exchange, which has managed to generate significant visibility.

“Hyperliquid bills itself as the blockchain to house all finance and has recently seen inflows of over $1 billion and reached $3.2 billion in TVL since launching its native token last month, despite major issues centralization,” Lin said.

Furthermore, he pointed out that “Solana is more sensitive to changes in market sentiment than BTC or ETH, as its growth in 2024 can be attributed to more speculative activities associated with its ecosystem such as memecoins and high-traffic trading.” of leverage”.

Healthy consolidation

The analyst also offered a separate and more neutral possible explanation for the SOL token’s recent declines.

“Solana’s price could have been disproportionately affected by market conditions in the past and is now experiencing a healthy correction,” Lin noted.

Tim Enneking, Managing Partner of Psalionseemed to be on the same wavelength.

When asked what fueled SOL’s recent price decline, he said: “In this case, I think the answer is relatively simple: the markets, and Solana in particular, have moved very far, very quickly and they are now consolidating. This is actually a very healthy consolidation before the next rise.

To explore this question further, the author of this article questioned whether profit-taking was behind this downward price movement, to which Enneking replied: “It is clearly part of the consolidation, as well. than tax considerations (especially since the wash sales rule does not apply to crypto).

Disclosure: I own Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS, and SOL.