Solana (SOL) price is trying to break the last three-month downtrend amid important news like Google partnership, new smartphones and Web3 store. However, recent data shows that this momentum is being blocked by other altcoins.
Solana tries to stop multi-month decline with huge news
cryptocoin.comAs you follow, the world’s largest cloud storage service Google Cloud has announced its partnership with Solana. Among other highlights is Solana’s partnership with Helium Mobile for its smartphone Saga. SolanaLabs’ new Android phone will use the 5G technology of the Helium network. Along with these, Solana team shared their expansion plans to Turkey. In a new announcement, the team announced that the Solana Istanbul Conference will take place between March 31 and April 2, 2023. Together with these and the STEPN partnership, the Solana price has been rising since the evening of November 5th. But new data shows that projects like Aptos will stand in the way.
Solana price has been in a steady downtrend for the past three months. Its recent poor performance has caused a lot of speculation. Some analysts suggested that the negative trend was due to the interest around Aptos.
Interest in Aptos drives Solana out of sight
Aptos (APT) was launched on October 17, listing on multiple major centralized exchanges. Currently, it can allegedly process three times more transactions per second than Solana. Still, after four years of development and millions of dollars in funding, the debut of the tier 1 smart contract solution was quite impressive.
Solana, on the other hand, has been in a downtrend for about three months. A $116 million DeFi hack dated October 11 accelerated the decline. Mango Markets’ oracle service was hacked due to the low liquidity of the platform’s native Mango (MNGO) token used for collateral. To put things in perspective, the attack represents 9% of Solana’s total value (TVL) locked in smart contracts.
Other negative news surfaced on November 2. On this date, the German data center operator and cloud provider Hetzner began blocking crypto-related activities. The company’s terms of service prohibit customers from running, mining, and storing nodes. We covered the details in this article.
Solana derivatives metrics show unusually irrelevant
The growth of derivatives contracts currently in effect usually means more investors are involved. In futures markets, long and short positions are always balanced. However, having a larger number of active contracts allows participation by institutional investors who require a minimum market size.
Over the past 30 days, total open interest on Solana has been reasonably stable at $440 million. For comparison, the Polygon bulk futures position rose from $153 million to $415 million on Oct. BNB exhibited a similar trend, reaching $485 million from $296 million on Oct.
Data from Laevitas shows that Solana’s futures have been trading retrospectively for the past 30 days. This means that the contract price of futures is lower than regular spot exchanges. Ethereum futures are trading at 0.5% year-on-year, while Bitcoin stands at 2%. The data is somewhat worrying for Solana as it points to a lack of interest from leverage buyers.
Rumors about Alameda Research cause more pressure
The reason for such apathy towards Solana, and even the complete dominance of leverage gap demand, is unclear. Even more interesting is Alameda Research’s influence on Solana projects. Alameda is the digital commerce company led by Sam Bankman-Fried. Recently, crypto analyst and Twitter phenomenon Hsaka expressed concern about whether the firm was suppressing SOL prices even after bullish catalysts emerged:
It’s probably unlikely that market participants will actually learn about Alameda Research’s impact on the SOL price. Still, Hsaka’s theory explains the rather unusually stable demand for leverage shorts. Arbitrage and the market maker could use derivatives to reduce their risk without selling SOL on the open market.
There is no sign that shorts using SOL futures instruments are nearing liquidation or exhaustion. Therefore, their dominance continues until the overall market shows signs of strengthening.
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