The SOL Token has seen a double-digit loss in the last 24 hours as NFT activity stagnates
SOL drops again
The price action of the Solana token looked to be heading towards a more bullish future as the Solana Breakpoint event went on in Lisbon but, as the event closed, so too did the positive action of the token.
Solana is a proof-of-stake layer-1 blockchain that has been designed to offer high scalability and speed. The project is still in its early stages of development, but it has managed to gain the backing of some big names in the crypto space.One of those backers is Google Cloud, which announced earlier this week that it would be running a Solana validator. However, despite this show of support, the SOL token has taken a beating over the past day.
At the time of writing, SOL is currently trading at $32.17, which is down 11.8% from its price 24 hours ago. This marks a drop from its recent high of $36.29 which was reached just a week ago. The drop in price comes as the NFT market appears to be cooling off after a period of explosive growth. According to data from NonFungible, the total value locked in NFTs has dropped by nearly 20% in the last week.
Investors pull out
It’s possible that investors are selling off their SOL tokens in order to buy into the dip in the NFT market. However, it’s also possible that the Google Cloud announcement has not had the positive impact on the token that was expected. Either way, it’s clear that the Solana project still has a lot of work to do in order to convince investors of its long-term potential. For now, the bears seem to be in control of the SOL token.
The bearish price action has wiped out Solana’s gains for the week, putting it down 4.2%. SOL is still 87.8% down from its all-time high of $259.96, recorded a year before.
Over $8.37 million of Solana futures positions were liquidated over the past 24 hours, per data from Coinglass. The majority of liquidations (85.14%) came from long trades that were forced to close due to losses
Currently, SOL has been placed as the 10th largest cryptocurrency and has lost its long-held position ahead of Dogecoin.
What gives?
The bearish price action of the SOL token comes as the result of a slump in Solana-based NFT volume, which played a significant role in the blockchain’s success early this year.
According to data from Nansen, returning NFT buyers on Solana have reduced significantly to levels not seen since November 2021. The metric for first-time buyers has also dropped to 6.097 yesterday compared to 17,090 on October 28th.
The lack of activity from both new and returning NFT buyers indicates investors’ growing interest in the network. This is likely due to the current market conditions where many investors are choosing to exit the market or take a more conservative approach to their investments.
Solana transactions as a whole have significantly reduced over the past four weeks as well. The network hit an all-time high of 650,000 transactions during the second week of September. However, since then the value has been in free fall and as of November 7th, the network was only processing roughly 160,000 NFT transactions.
The market slump over the past 24 hours has affected the crypto industry as a whole. The market capitalization for the industry has fallen by more than 3% to slightly above $1.02 trillion. Leading assets such as Bitcoin, Ethereum, and XRP have all seen losses in the past day.
Solana is not the only blockchain feeling the effects of the current market conditions. The NFT market as a whole has seen a decrease in activity and some projects have even had to lay off staff or reduce salaries.
It is still too early to tell what the long-term effects of the current market conditions will be on Solana and the NFT industry. However, it is clear that the blockchain still has a lot of potential and is currently one of the most active in the space. With the right conditions, Solana could once again become a major player in the NFT market.
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