Solana price has been in a consolidation phase in the past few weeks amid lingering challenges in its ecosystem. It was trading at $13.22 on Monday, where it has been in the past few weeks. It has plunged by more than 66% from its highest level in November.
Ecosystem challenges remain
Solana price has been under intense pressure in the past few weeks because of its significant exposure to FTX and Alameda Research.
The main exposure was through Serum, one of the biggest DeFi projects in its ecosystem. Serum was the main liquidity provider in most DeFi projects in Solana. It was built by a consortium of companies, including FTX.
Unlike other DeFi protocols, Serum’s key was not held by the decentralised autonomous organisation (DAO). Instead, it was held by FTX, which has raised a lot of concerns. As a result, after FTX’s collapse, most people dumped their holdings in the network, leading to the sharp decline of SRM.
Now, Serum’s community is working to rebuild its network using lessons learnt. They have cloned Serum’s code and created OpenBook, a platform that has a TVL of about $2 million. It now ranks as the 31st biggest platform on Solana. The challenge will be how to incentivise users who lost money via Serum to take part.
Solana’s ecosystem is still having challenges. Its total value locked has plunged from more than $12 billion to about $460 million. It is led by Marinade Finance, a platform that offers Marinade Finance, Raydium, Orca, and Quary.
According to CryptoSlam, the volume of Solana NFTs has also declined in the past few months. In November, total sales in the ecosystem were $70 million, down from the $311 million that it handled in April.
Solana price forecast
The 4H chart shows that the SOL price has been in a consolidation phase in the past few days. Along the way, it has formed a small triangle pattern that is shown in green. It is also consolidating at the 25-day and 50-day moving averages while the Average True Range (ATR) has dropped sharply in the past few days.
Therefore, while the overall outlook for Solana is bearish, we can’t rule out a situation where it stages a strong comeback after the Fed decision. If this happens, the next key level to watch will be at $19.18. A move below the support at $11 will mean that bears have prevailed.
