Solana’s native token SOL ( SOL ) failed to sustain levels above $200 after multiple rejections between Dec. 25 and Dec. 26. This movement aligned with the broader cryptocurrency market, which saw a 3.5% decline over two days ending Dec. 27. However, SOL underperformed with a 5.1% correction, raising concerns among traders about potential further price declines.

One key source of concern was Solana’s onchain network volumes, which dropped by 30% over seven days.

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Blockchains ranked by 7-day DApps volumes, USD. Source: DefiLlama

Despite securing second place in weekly volumes with $20.9 billion, Solana performed the worst among the top 10 blockchains. In comparison, Ethereum's on-chain volumes fell by 15%, while Sui experienced an 8% decline. Moreover, Ethereum’s ecosystem solidified its lead when factoring in layer-2 solutions such as Arbitrum, Optimism, Base, and Polygon.

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Solana weekly Dapps volumes, USD. Source: DefiLlama

Solana's weekly DApp volumes, as tracked by DefiLlama, also reflected negative trends. Highlights include a 39% decline in activity for Orca and Phoenix over seven days, while Raydium activity dropped 30%. Of greater concern, memecoins on Solana, which have been a significant draw for new users, posted poor 30-day performance. Onchain activity—spanning token launches, staking, and trading—remains a crucial driver of demand for SOL.

Among memecoins, Popcat fell 42% in the 30 days leading to Dec. 27, Dogwifhat (WIF) declined 40%, and BONK dropped 25 %. In contrast, the total cryptocurrency market capitalization remained flat over the same period.

Notably, the correction was not exclusive to Solana-based memecoins, but Raydium’s recent success had been heavily tied to the pump.fun memecoin frenzy. These challenges underline the importance of sustaining onchain activity to maintain SOL demand.

Total deposits on the Solana network, as measured by total value locked (TVL), reached a two-year high of 44 million SOL. The 16% monthly increase was driven by platforms such as Binance Staked SOL, Jupiter, Drift, and Orca, according to DefiLlama data. On the downside, Jito, Sanctum, and MarginFi saw a decline in deposits.

SOL futures signals resilience despite price decline

To assess whether professional traders have turned bearish on SOL, the derivatives market offers key insights. For example, monthly futures contracts typically trade at a 5% to 10% annualized premium in neutral markets. This premium compensates sellers for the longer settlement periods associated with these instruments.

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SOL 3-month futures annualized premium. Source: Laevitas.ch

While lower than the 20% premium recorded on Dec. 18, the current 10% premium is at the threshold of neutral-to-bullish sentiment. Considering SOL’s 16% price decline during the same period, the derivatives market has shown resilience.

To gauge retail traders’ sentiment, analyzing SOL perpetual futures is essential. Exchanges manage risk through funding rates , which become positive when buyers require additional leverage and negative when sellers dominate.

Related: Betting markets predict bullish 2025 for crypto

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SOL futures 8-hour funding rate. Source: Coinglass

Over the past month, the SOL funding rate has remained below 0.015%—equivalent to an annualized 1.2%—indicating a neutral market. However, on Dec. 27, the rate turned negative, signaling reduced demand from leveraged longs (buyers). This shift is concerning, given that SOL has declined 30% since its all-time high of $264.50 on Nov. 20.

The sharp drop in Solana's onchain activity and declining interest in memecoins suggest a moderately bearish outlook for SOL’s short-term price. Despite this, derivatives data indicate that whales and market makers remain optimistic, suggesting limited downside risk below $180.

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.