Solana

Chair

Wormhole

POPCAT

Solana’s native token, SOL (<a data-ct-non-breakable="null" href="https://cointelegraph.com/solana-price-index" rel="noopener noreferrer nofollow" target="null" text="null" title="null">SOL</a>), has surged 13% from the local bottom of $203.30 on Dec. 10, reclaiming the $230 level. This recent price action has opened the door for further upside, as indicated by both derivatives and onchain metrics. Market participants are now questioning whether the correction is over and what catalysts could drive the price to $260 and beyond.
SOL was one of the few tokens to achieve a new all-time high in 2024, reaching $264.50 on Nov. 22. However, the momentum could not be sustained, with SOL underperforming as the broader altcoin market cap rose 18% since Nov. 22, while SOL price fell 12%.
<figure><img alt="Solana rallies above $230, paving the way for new SOL price all-time highs" src="https://s3.cointelegraph.com/uploads/2024-12/0193b6db-ddee-7e86-9792-5e0bc1ae33bd" title="">
 <figcaption style="text-align: center;">
 SOL/USD (blue) vs. altcoin market cap (green), USD. Source: TradingView / Cointelegraph
 </figcaption>
</figure>
Part of SOL's recent success can be attributed to Solana's SPL tokens, including memecoins. However, this sector has recently experienced a significant slowdown in both volume and price. Over the past week, Dogwifhat (<a data-ct-non-breakable="null" href="https://cointelegraph.com/dogwifhat-price-index" rel="noopener noreferrer nofollow" target="null" text="null" title="null">WIF</a>) fell 8%, BONK (<a data-ct-non-breakable="null" href="https://cointelegraph.com/bonk-price-index" rel="noopener noreferrer nofollow" target="null" text="null" title="null">BONK</a>) saw a 9% decline, and Jupiter (<a data-ct-non-breakable="null" href="https://cointelegraph.com/jupiter-price-index" rel="noopener noreferrer nofollow" target="null" text="null" title="null">JUP</a>) dropped 12%. Other projects, such as POPCAT (<a data-ct-non-breakable="null" href="https://cointelegraph.com/popcat-sol-price-index" rel="noopener noreferrer nofollow" target="null" text="null" title="null">POPCAT</a>) and Wormhole (W), experienced a sharp 11% crash during the same period.
<figure><img alt="Solana rallies above $230, paving the way for new SOL price all-time highs" src="https://s3.cointelegraph.com/uploads/2024-12/0193b6dc-1f62-706f-8b28-8c23abdf4e20" title="">
 <figcaption style="text-align: center;">
 Solana 7-day onchain volumes, USD. Source: DefiLlama
 </figcaption>
</figure>
More concerning is the 63% drop in onchain volumes on the Solana network in the week ending Dec. 9, raising concerns about the sustainability of the recent price spike. However, it is important to note that this trend was not exclusive to Solana; Ethereum, BNB Chain, and Avalanche also saw similar declines.
<h2 id="strong-mev-strategy-sandwiching-linked-to-sol-s-underperformance-strong">MEV Strategy 'sandwiching' linked to SOL's underperformance</h2>
While the exact reasons for SOL’s underperformance relative to the broader altcoin market remain unclear, some traders, including WazzCrypto, suggest that 'maximal extractable value' (MEV) is the primary factor behind the recent downturn.
<figure><img alt="Solana rallies above $230, paving the way for new SOL price all-time highs" src="https://s3.cointelegraph.com/uploads/2024-12/0193b6dc-5c08-790a-a9ba-0f6413f51590" title="">
 <figcaption style="text-align: center;">
 Source: <a data-ct-non-breakable="null" href="https://x.com/WazzCrypto/status/1866606532508504477" rel="noopener noreferrer nofollow" target="null" text="null" title="null">WazzCrypto</a>
 </figcaption>
</figure>
A post by WazzCrypto on X suggests that most of the value extraction on Solana is driven by 'sandwiching,' a type of maximal extractable value (MEV) strategy where traders place orders before and after a target transaction to capitalize on the price fluctuations it causes. The thread highlights one instance where a single address reportedly executed 50% of the MOTHER token’s volume, while the majority of traders incurred losses during similar token launches.
From a derivatives perspective, the cryptocurrency market crash on Dec. 9 benefited SOL, as excessive leverage was cleared from the system. SOL futures open interest dropped by 12%, reaching the current level of 22.8 million SOL, and the cost of bullish leverage fell below 1% for the first time in over a month.
<figure><img alt="Solana rallies above $230, paving the way for new SOL price all-time highs" src="https://s3.cointelegraph.com/uploads/2024-12/0193b6dc-a77a-799e-ba7f-3de7a286f843" title="">
 <figcaption style="text-align: center;">
 SOL perpetual futures 8-hour funding rate. Source: CoinGlass
 </figcaption>
</figure>
After peaking at 6% per month on Dec. 5—signaling extreme optimism—the funding rate sharply declined on Dec. 9, following the forced liquidation of leveraged long positions. The current market conditions appear healthier, particularly considering that the total SOL <a data-ct-non-breakable="null" href="https://cointelegraph.com/learn/articles/open-interest-vs-trading-volume" rel="noopener noreferrer nofollow" target="null" text="null" title="null">futures open interest</a> now stands at $5.2 billion.
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/united-states-democrats-leadership-committees-crypto-policy" rel="noopener noreferrer nofollow" target="null" text="null" title="null">US Dems choose leadership for committees crucial to crypto policy</a>
Investor sentiment in SOL was further boosted by a <a data-ct-non-breakable="null" href="https://x.com/RasterlyRock/status/1866874573616288030" rel="noopener noreferrer nofollow" target="null" text="null" title="null">target</a> price of $750 set by Bitwise, a cryptocurrency exchange-traded fund (ETF) provider. The firm cited growing institutional investment, an improved regulatory environment, and the arrival of "serious" projects on the network, which could further enhance its dominance in memecoins.
Additionally, traders are increasingly optimistic that a <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/sec-reject-bids-solana-etfs-report" rel="noopener noreferrer nofollow" target="null" text="null" title="null">Solana ETF approval</a> in the US is imminent, especially <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/gary-gensler-resign-sec-crypto-scrutiny" rel="noopener noreferrer nofollow" target="null" text="null" title="null">following the resignation</a> of Securities and Exchange Commission (SEC) Chair Gary Gensler. Given these factors, SOL investors have cause for optimism, with a favorable outlook for early 2025 and healthy derivatives markets.
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.

Solana rallies above $230, paving the way for new SOL price all-time highs

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