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SOL Futures Open Interest Hits Two-Year High Amid Competition Challenges

Solana’s SOL cryptocurrency has seen its futures open interest surge to a 3.5-year high, marking increased institutional interest, according to recent CoinGlass data. However, intensifying competition from other blockchains and neutral funding rates continue to temper its bullish momentum.

Following a significant 10% gain between Monday and Thursday, SOL’s price subsequently showed weakness. Traders’ growing interest in leveraged positions, particularly on Deribit where SOL options gained popularity last week, presents a potential path towards the $200 target established weeks ago.

Institutional Inflows Signal Growing Market Activity

On Wednesday, SOL’s total open interest in futures contracts climbed to approximately 46.2 million SOL, reaching a peak not seen since policy changes allowed access to Asian buyers in late 2022. This represents a 22% increase from one month prior. With cumulative positions worth $7.4 billion, SOL attracts significant market attention, fostering opportunities for arbitrage and fund-of-fund strategies within the $15 quadrillion cryptocurrency derivatives market.

The narrative surrounding a potential US spot SOL ETF persists, with analysts actively covering this potential catalyst. Analysts from Bloomberg anticipate regulatory approval for Litecoin (LTC), SOL, and XRP ETFs by the end of this year, but no immediate signs suggest an imminent price movement towards $200 are emerging.

Network Activity Dips, Competition Intensifies

Solana’s decentralized exchange (DEX) volume experienced a significant decline, dropping to roughly $10.5 billion per week compared to $29.2 billion approximately one month ago. While the DEX share of the broader trading volume reached a peak much earlier, Binance-competitive platforms like Bybit recently surpassed SOL in perpetual futures trading volume.

BNB’s Layer 1 blockchain actively courts traders with competitive fees and seamless integration with the Binance ecosystem. This low-friction experience contrasts with Ethereum’s reliance on layer-2 solutions, giving BNB a distinct edge in attracting trader capital.

SOL Funding Neutral, May Lack Strong Rally Drivers

Funding rates for SOL perpetual futures reflect a neutral sentiment. In essence, funding should range between 5% and 15% annually. Extended tracking shows SOL’s funding rate hovering at the neutral threshold or slightly below (below the 5% mark), failing to sustain gains significantly above this in the last 30 days. Though marginal negative rates indicate occasional mild seller pressure, there’s no clear strong bullish signal.

A cautious view highlights that while SOL’s futures are drawing institutional capital, concerns about high competition on major trading venues (like Binance’s own Hyperliquid) may be dampening expectations for significant gains, diminishing the likelihood of a swift return to last month’s highs. The broader cryptocurrency market cap also remains significantly below its record zenith.

(Cointelegraph does not endorse any projects or assets featured in this article. Investing in cryptocurrency should be done with care. Conduct thorough research before making any decisions.)