The price of Solana's native token, SOL, has experienced a significant drop of 7.22% in the past 7 days, reaching $150.33 on June 17.
The price of Solana's native token, SOL, has experienced a significant drop of 7.22% in the past 7 days, reaching $150.33 on June 17. This decline outpaces the broader cryptocurrency market, which has seen a more modest reduction of around 1.5% over the same period. Several factors contribute to this underperformance, including growing competition from Ethereum (ETH) and stagnant inflows into the Solana ecosystem.
A major factor behind SOL's recent price drop is the increasing prominence of Ethereum, particularly in light of the potential regulatory approval for spot Ether exchange-traded funds (ETFs) in the United States. This development has significantly bolstered Ethereum’s market position, drawing attention and investment away from Solana. Since May 20, when the U.S. Securities and Exchange Commission (SEC) began contacting Ether ETF applicants to update their filings, the SOL/ETH pair has dropped by 22.65%.
Adding to the pressure on Solana, its market dominance has been declining. Since May 20, SOL's market share has fallen from 3.30% to 2.82%, while Ethereum’s has risen from 15.78% to 18.04%. This shift indicates a growing preference for Ethereum among investors, which is further supported by recent investment trends. According to CoinShares' weekly report, Ether investment vehicles attracted $68.9 million in the week ending June 8, significantly higher than Solana's $0.7 million inflows during the same period.
The decline in SOL's price also correlates with stagnant network activity within the Solana ecosystem. The total value locked (TVL) in Solana's leading projects, such as Jito, Marinade, and Kamino, has seen modest declines in their SOL reserves over the past 24 hours. Another contributing factor to SOL's price drop is the sharp decline in the number of users on decentralized exchanges (DEXs) on the Solana blockchain. As users exit the DEXs or the ecosystem, they may sell off their SOL holdings, increasing selling pressure without a corresponding rise in buying demand.
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