Could SOL be heading towards $160? What do the on-chain data and derivatives say?

Key Points - Solana continues to suffer from leverage contraction and declining network revenues, despite maintaining its lead in active addresses. - A bullish move reaching $160 requires stronger signals from the derivatives markets and renewed market confidence amid an uncertain global economy. - Onchain data shows activity growth, but this is not enough to offset the bearish pressure from futures.

The macroeconomic context weighs on SOL’s prospects

The current weakness on Solana reflects broader risk aversion in the crypto market. Recent US economic signals have fueled uncertainties: from labor market data to underwhelming performances by companies like Target, Home Depot, and McDonald’s.

Global asset managers continue to question the correct valuation of the artificial intelligence sector. This macroeconomic confusion has led traders and investors to reduce risk exposure, particularly impacting altcoins at a time when the Fed remains ambiguous about its next monetary policy move.

Why SOL is underperforming compared to major altcoins

While the overall crypto market is recovering ground, SOL remains behind with a 30% decline in the last 30 days. Several factors explain this weakness:

Institutional competition intensifies: The approval of XRP ETFs in the US has diverted institutional flows, with additional products coming for Litecoin and Chainlink. This fragmentation of capital has reduced demand for SOL.

Derivatives market signals bearishness: The funding rate for perpetual futures on SOL has turned negative, indicating traders are paying to hold short positions. Normally, this rate fluctuates between 6% and 12%; a negative value signals expectations of declines. Open interest in SOL futures has plummeted 27% in 30 days, confirming leverage withdrawal from the market.

The monthly futures premium over the spot price has zeroed out (normally between 5% and 10%), an unmistakable sign of lack of demand for bullish positions.

Network revenues are contracting: Total value locked on Solana has dropped to $10.5 billion, down 20% month-over-month. Weekly transaction fees have hit their lowest since May, showing a sharper decline compared to Ethereum (which only lost 5% in the same period).

Onchain activity remains strong, but not enough

A positive aspect comes from onchain data: Solana maintains an unmatched lead in active addresses and transaction volume, with a wide gap from the second network, BNB Chain. Nansen data even shows a 13% increase in activity on the network.

In contrast, Ethereum saw a 15% decrease in active addresses over the same period. Despite these positive indicators, onchain growth has not generated a sustained bullish movement because it has not been accompanied by renewed confidence in derivatives and stable institutional demand.

The scenario to reach $160: what is needed

SOL has gained 14% from the low of $121.50 touched on Friday, but the rebound remains fragile. With the token currently at $142.15 (from the latest data), a move toward $160 is theoretically possible but not guaranteed.

For a short squeeze toward that level to occur, the following would be necessary:

• A significant reversal in sentiment in the derivatives markets, with the funding rate turning positive and open interest increasing
• Demonstration of strength by SOL traders through accumulation and bullish positioning
• Favorable macro catalysts reducing global economic uncertainty
• Structural improvements in network revenues and TVL

Conclusion: caution in the short term

Although a short squeeze toward $160 cannot be categorically ruled out, current fundamentals suggest caution. The combination of weakened derivatives, competition for institutional flows, and declining network fees presents a significant obstacle for SOL in the near term.

Robust onchain activity and Solana’s leadership among blockchains remain supporting factors in the medium to long term, but alone they are not sufficient to trigger a lasting bullish rally until derivatives market conditions show renewed demand for leverage.