- Solana’s recent rally, fueled by memecoin hype, may be short-lived as on-chain activity declines and investors shift focus to the stock market.
- Despite leading in DEX volume, Solana faces challenges reaching its all-time high due to decreasing network fees and a balanced leverage demand in futures markets.
Solana (SOL) surged 7% on January 22nd, but several metrics suggest a climb to its all-time high may be delayed. While SOL has outperformed the broader altcoin market in 2025, its recent gains appear to be fueled by memecoin hype, particularly surrounding the launch of the ‘Official Trump (TRUMP)’ token.
Challenges on the Road to $280
On-chain and derivatives data indicate that SOL may face hurdles surpassing $280. Solana network fees have plunged 67% since January 19th, mirroring a decline in trading activity on decentralized exchanges (DEXs) like Raydium, Pump.fun, and Orca. This suggests the recent surge in network usage might not be sustainable.
Daily active addresses on the Solana network also peaked at 16.5 million on January 20th before dropping to 13 million. However, Solana still boasts the leading market share in DEX volume, capturing over 45% compared to the combined share of BNB Chain and Ethereum.
Stock Market Shift and Leverage Demand
Traders may be rotating into the stock market, potentially fueled by optimism surrounding a business-friendly environment following a recent political shift. The S&P 500 reached an intraday record on January 22nd, bolstered by strong performances from companies like Netflix, Oracle, and Nvidia.
Examining leverage demand in SOL futures markets reveals a balanced sentiment between bullish and bearish positions. While a surge in demand for short (sell) leverage emerged briefly on January 20th, the current funding rate suggests a neutral market.
Without a significant catalyst, such as US approval of a spot Solana ETF, SOL’s path to its all-time high seems uncertain. Investors should monitor on-chain activity, leverage demand, and developments in the broader market to gauge SOL’s future trajectory.
