Do traders buy the dip when the price of SOL drops below $100?

The native token of Solana, SOL, fell below $100 on Saturday, marking the lowest level since April 2025. Although an 18% correction over 30 days surprised many traders, this development generally aligns with the weakening trend of altcoin market capitalization. The 26% drop in silver prices on Friday further reinforced a defensive mindset, prompting cryptocurrency investors to prepare for a deeper decline scenario.

SOL/USD exchange rate (orange) compared to altcoin market capitalization (blue) | Source: TradingView SOL then recovered to around $102, but sentiment remains fragile as $165 million worth of long positions in the derivatives market were forcibly liquidated. Pressure is also mounting due to macroeconomic and geopolitical risks: escalating tensions in Iran, along with recession fears following Amazon (AMZN US) cutting 16,000 office jobs.

Risk appetite continues to decline as the market notes that OpenAI accounts for 45% of Microsoft’s (MSFT US) Azure cloud computing order volume. Additionally, The Wall Street Journal reports that Nvidia (NVDA US) will not proceed with its $100 billion investment plan in OpenAI. According to The Information, the company behind ChatGPT is forecasted to incur a net loss of $14 billion in 2026.

Despite a bleak socio-political backdrop, Solana’s on-chain activity remains prominent compared to competitors, reinforcing its position as a leading group in network fees and Total Value Locked (TVL). Positive on-chain indicators provide a dual benefit for SOL: (1) improving staking yields to encourage long-term holding; and (2) maintaining steady demand for data processing fees.

According to Nansen data, Solana’s network fees increased by 81% over the past 30 days compared to the trend, active addresses grew by 62%, and transaction count reached 2.29 billion. Meanwhile, the entire Ethereum ecosystem (including layer-2 solutions) recorded 623 million transactions, with base layer fees increasing by only 11%. Solana continues to lead in the activity level of decentralized applications (DApps).

Ranking of blockchains based on 30-day transaction fees relative to recent averages | Source: Nansen In the derivatives market, demand for long positions on SOL nearly “disappeared” as capital shifted to cash and short-term government bonds. Many large-cap tech stocks such as Unity (U US), AppLovin (APP US), Figma, and HubSpot (HUB US) declined over 30% in 30 days. Even gold—often considered a safe-haven asset—fell 13% from its all-time high of $5,600 set on Thursday.

Annual funding rate of the SOL futures contract | Source: laevitas.ch Notably, the annualized funding rate of the perpetual SOL futures contract dropped to -17%, indicating that the short side is paying fees to maintain their positions. This is an unusual state, typically short-lived, reflecting a depletion of leveraged demand from longs. This development coincides with political debates in the US regarding budget funding.

On the policy front, the US Senate approved a funding package on Friday, along with a “wait-and-see” measure for two weeks to extend budget negotiations—particularly around funding for the Department of Homeland Security, following Democratic criticisms of immigration enforcement. The House is expected to vote on the final version by Monday.

Publicly listed companies ranked by total SOL expenditure, USD | Source: CoinGecko In investment products, Solana spot ETFs saw $11 million in net outflows on Friday (according to CoinGlass). Meanwhile, publicly traded companies holding SOL as a reserve asset are under valuation pressure: Forward Industries (FWDI US), Upexi (UPXI US), and Sharps Technology (STSS US) are trading more than 20% below their respective net asset values.

Overall, SOL’s ability to regain a sustainable upward momentum will mainly depend on improvements in global economic growth prospects and the cooling of socio-political risks—factors unlikely to return soon in the short term.