Solana is the next best target for companies that have been pursuing crypto ETFs. Especially after the success that Bitcoin and Ethereum ETFs have achieved so far this year. However, it looks like 2024 will come to an end before the launch of Solana ETFs.
Reports have emerged indicating that the U.S Securities and Exchange Commission intends to slap down Solana ETF applications.
The regulatory authority has reportedly notified some of the companies that filed the Solana ETFs about the rejections.
The main reason for the decision was reportedly the uncertainty behind Solana’s regulatory position. The SEC reportedly expressed concerns that Solana might be a security.
How would Solana ETF approvals influence SOL price? Historically, news of potential approvals led to price surges in the days prior to the official announcement. However, prices ended up dipping in the first few days after ETF launches.
Things are much different this time because Solana ETF applications will be rejected. This outcome was not expected to have a direct impact on price since it has no connection to demand.
Solana Price Remains Above $200, TVL Explores New Heights
Total value locked has been a good yardstick for assessing the level of confidence and network utility. In that regard, the healthy network activity that prevailed in Solana has extended into December.
Solana TVL pushed as high as $11.72 billion in the last 24 hours, marking a new historic high. This outcome was backed by a burst of on-chain volume. The latter soared as high as $13.21 billion on 6 December.
Positive TVL growth coupled with a surge in volume are usually signs of growing confidence among investors.
This reflects the recent shift to a longer term focus and the most notable impact was SOL’s bullish price action.
Although SOL recently pulled back from its $264.39 November peak, it has so far managed to stay above $200. This confirmed that the general consensus among investors was still bullish.
The lack of strong sell pressure after recent highs suggests that investors were still optimistic about SOL’s bullish prospects.
SOL Demand Shows Signs of Decline
While November was an overall bullish month for Solana price, it has struggled to achieve significant upside in the first week of December.
This signaled that bulls were cooling off and this was evident in it price action. It exchanged hands at $237 at press time which was the same range since the start of December.
The declining demand was particularly evident in its spot netflows which have been declining since the third week of November.
For context, inflows on 6 December amounted to $15.37 million, the lowest daily inflows recorded in the last 3 weeks.
This observation was also in line with declining funding rates in the derivatives segment. The cryptocurrency maintained positive funding rates in the last 4 days. However, lower highs indicate declining bullish demand.
These observations could be a reflection of declining demand. If this trend continues, then SOL could give in to capitulation.
Chances are that a major pullback could send the cryptocurrency as low as $156 level which is its next major support level. On the other hand, extended demand may push SOL above $300 possibly before the end of 2024.
