SOL has been struggling to keep pace with the broader altcoin market, raising questions about the future of Solana. Recent data shows that SOL is lagging behind its competitors, with a notable decline in on-chain activity, fees, and decentralized application (DApp) revenues. Investors are beginning to wonder if Solana's glory days are behind it.

Since November, SOL has dropped by 32%, while the wider altcoin market has only seen a 21% decline. This growing gap is concerning for bulls, especially in light of recent inflows into SOL exchange-traded funds (ETFs) and the increasing number of companies adding SOL to their balance sheets. What needs to happen for SOL to reestablish a bullish trend?

In the U.S., the Solana ETF market has gathered $636 million in assets since the launch of the REX-Osprey SOL+Staking ETF in July. Companies like Forward Industries and Sharps Technology have added a combined 20.35 million SOL to their reserves, valued at over $2.5 billion. This indicates institutional interest, but it hasn't translated into positive price action for SOL.

Moreover, nearly 68% of the circulating SOL supply is currently staked in the network's proof-of-stake system. This percentage has steadily increased over the past few months, limiting the amount of SOL available for immediate sale. Staking yields on Solana can exceed 6%, providing some incentive for holders to keep their assets locked up.

However, the drop in SOL’s price toward the $120 level seems to be more closely linked to softer expectations regarding Solana's network demand. Broader crypto adoption trends appear to be shifting toward competing platforms, which may not require direct blockchain settlement.

On-chain activity has been steadily declining since August, with weekly network fees falling from $7 million to $4.5 million just two months later. DApp revenues have also suffered a 30% decline during this time, dropping to $26 million per week. As Solana's utility weakens, competitors have been gaining traction.

For example, Ethereum's L2 ecosystem has seen a surge in activity, with monthly transaction counts increasing by 6% on Ethereum, compared to just 4% on Solana. Meanwhile, platforms like Base, Arbitrum, and Polygon have experienced significant growth, with transaction counts rising 34%, 21%, and 89%, respectively. Even Tron, a direct competitor, saw a 13% increase in transactions.

Investors are becoming more cautious as they observe the relative success of DApps on BNB Chain, such as the Aster decentralized exchange and Four-meme, a memecoin launch platform. These projects benefit from support from Binance, which provides easier access to developers and marketing resources.

The recent moves by Binance into prediction markets could further complicate the bullish case for SOL. Without a clear reversal in Solana's on-chain activity, it's unlikely that SOL will close its performance gap with the broader altcoin market. The competition isn't just coming from other blockchain networks; traditional fintech players are also entering the space, posing a significant threat to Solana's market position.

In summary, while there are positive indicators for SOL, such as institutional interest and staking activity, the overall trend appears to be downwards. Without a significant change in Solana's on-chain activity and demand, the prospects for a sustained bullish momentum remain uncertain. Investors should proceed with caution and conduct thorough research before making any decisions regarding SOL or other cryptocurrencies.