Solana’s native token SOL ( SOL ) saw its price drop by 17.2% between Jan. 24 and Jan. 27. After touching its lowest levels in 10 days, the price recovered to $235, but this is still 26% below its Jan. 19 all-time high of $295. This recent downturn partially reflects a 40% decline in Solana’s network onchain trading activity. Despite the short-term weakness, SOL has the potential for further gains in 2025.

3 things must happen for Solana (SOL) price to rebound to new all-time highs image 0

7-day onchain trading volumes rank, USD. Source: DefiLlama

Solana’s competitors have shown more resilience. BNB Chain volumes dropped by just 1%, while Ethereum’s base layer saw a 10% reduction in activity over seven days. However, it’s important to note that other competitors and Ethereum layer-2 solutions also reported 25% to 30% lower onchain volumes during the same period.

Negative highlights within Solana’s ecosystem include Meteora, down 45% in volumes; Orca, down 62%; and Lifinity, which experienced a 53% decline in activity. Conversely, the Pump.fun memecoin launchpad was a bright spot, achieving a 24% increase in volume over the same timeframe. Solana's Raydium platform remained the leader, recording $35.1 billion in weekly onchain activity.

Solana TVL rose 27%, outperforming Ethereum and BNB Chain 

It would be misleading to evaluate SOL’s potential upside based solely on Solana’s onchain activity, which is heavily driven by decentralized exchanges (DEXs). Activities like staking, lending, and real-world assets (RWA) applications often don’t generate consistent onchain volumes. Therefore, total value locked (TVL) provides a more comprehensive measure of network usage.

3 things must happen for Solana (SOL) price to rebound to new all-time highs image 1

Total value locked (TVL) rank, USD. Source: DefiLlama

The TVL on Solana increased by 27% in the 30 days ending Jan. 28, significantly outperforming Ethereum, which declined by 9%, and BNB Chain, which slipped by 1%. This growth solidified Solana’s second-place position in the market, widening the gap with Tron. Notable contributors include Jito and Raydium, which saw deposits rise by 29%, and Binance Staked SOL, which grew by an impressive 52% during the month.

Ethereum’s recent activity decline can be linked to weaker performances in Lido, EigenLayer, and Ether.fi. Notably, staking platform EigenLayer , launched in June 2023, holds $13.6 billion in total value locked (TVL), surpassing the entire Solana ecosystem’s deposits. This highlights Ethereum's dominance and shows that some investors remain willing to pay $5 or higher transaction fees.

To understand Solana traders’ sentiment, it’s crucial to examine the monthly SOL futures contracts premium. Futures contracts typically trade at a 5% to 10% premium over spot markets to account for their longer settlement periods. A premium above 10% indicates strong bullish sentiment, while levels below 5% suggest weaker buyer confidence.

3 things must happen for Solana (SOL) price to rebound to new all-time highs image 2

SOL 2-month futures annualized premium. Source: Laevitas.ch

On Jan. 27, SOL futures briefly spiked to a 12% annualized premium but quickly dropped back to 6%. This relatively low premium, despite a 21% price rally over the past 30 days, suggests a lack of enthusiasm among investors. Some analysts argue that recent SOL price gains were largely driven by memecoins and the launch of the Official Trump (TRUMP) token.

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Regardless of whether risk aversion stems from uncertainties in global economies or stock markets, the odds of SOL reaching a new all-time high in the short term appear slim. Some analysts point out that recent SOL price gains were largely driven by memecoins and the Official Trump (TRUMP) launch.

Potential drivers for SOL’s future price appreciation include the migration of stablecoins from Tron to Solana and the increasing adoption of Web3 applications, particularly in the artificial intelligence sector.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.