Solana (SOL) has been in a steady downtrend for the past 3 months, but some traders believe that it may have bottomed at $26.80 on Oct. 21. Lately, there’s been a lot of speculation on the causes for the underperformance and some analysts are pointing to competition from Aptos Network.

Solana price at FTX, USD. Source: TradingView

The Aptos blockchain launched on Oct. 17 and it claims to handle three times more transactions per second than Solana. Yet, after four years of development and millions of dollars in funding, the debut of the layer-1 smart contract solution was rather unimpressive.

It is essential to highlight that Solana presently holds an $11.5 billion market capitalization at the $32 nominal price level, ranking it as the seventh largest cryptocurrency when excluding stablecoins. Despite its size, SOL’s year-to-date performance reflects a lackluster 82% drop, while the broader global market capitalization is down 56%.

Unfortunate events have negatively impacted SOL’s price

The downtrend accelerated on Oct. 11 after a leading decentralized finance application on the Solana Network suffered a $116 million hack.

Mango Markets’ oracle was attacked due to the low liquidity on the platform’s native Mango (MNGO) token which is used for collateral. To put things in perspective, the hack represented 9% of Solana’s total value locked (TVL) in smart contracts.

Other negative news emerged on Nov. 2 as German data center operator and cloud provider Hetzner started blocking crypto-related activity. The company’s terms of service prohibit customers from running nodes, mining and farming, plotting and storing blockchain data. Still, Solana nodes have other cloud storage providers to choose from, and Lido Finance confirmed that the risk for their validators had been mitigated.

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A potentially promising partnership was announced on Nov. 2 after Instagram integrated support for Solana-based NFTs, allowing users to create, sell and showcase their favorite digital arts and collectibles. SOL immediately reacted with a 5.7% pump in 15 minutes but retraced the entire movement over the next hour.

To get a more granular view of what is going on with SOL price, traders can also analyze Solana’s futures markets to understand whether the bearish newsflow has affected professional traders’ sentiment.

Derivatives metrics show an unusual degree of apathy

Whenever there is relevant growth in the number of derivatives contracts currently in play, it usually means more traders are involved. In futures markets, longs and shorts are balanced at all times, but having a larger number of active contracts — open interest — allows the participation of institutional investors who require a minimum market size.

Solana futures open interest, USD. Source: Coinglass

In the past 30 days, the total open interest on Solana has been reasonably steady at $440 million. As a comparison, Polygon’s (MATIC) aggregated futures position soared to $415 million from $153 million on Oct. 3.

BNB Chain’s token (BNB) displayed a similar trend reaching $485 million, up from $296 million on Oct. 3.

With that said, open interest doesn’t necessarily mean that professional investors are bullish or bearish. The futures annualized premium measures the difference between longer-term futures contracts and the current spot market levels.

The futures premium (basis rate) indicator should run between 4% to 8% to compensate traders for “locking in” the money until the contract expiry. Thus, levels below 2% are bearish, while numbers above 10% indicate excessive optimism.

Solana annualized 3-month futures premium. Source: Laevitas.ch

Data from Laevitas shows that Solana’s futures have been trading in backwardation for the past 30 days, meaning the futures’ contract price is lower than regular spot exchanges.

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Ether (ETH) futures are trading at a 0.5% annualized basis, while Bitcoin’s (BTC) stands at 2%. The data is somewhat concerning for Solana since it signals a lack of interest from leverage buyers.

Rumors about Alameda Research could create more pressure

It is hard to pinpoint the reason for so much apathy about Solana and even the complete dominance of leverage short demand. Even more curious is Alameda Research’s influence on Solana projects. Alameda is the digital asset trading company spearheaded by Sam Bankman-Fried.

Recently, trader and crypto Twitter influencer Hsaka raised concerns about whether the firm has been suppressing SOL’s price even after bullish catalysts emerged.

It’s probably highly unlikely that market participants will really find out Alameda Research’s impact on SOL price. Still, the theory raised by Hsaka could explain the rather unusual steady demand for leverage shorts and the negative basis rate. The arbitrage and market-making firm could have used derivatives instruments to reduce their exposure without selling SOL on the open market.

There are no signs that short sellers using SOL futures instruments are nearing liquidation or exhaustion, so their upper hand remains until the broader cryptocurrency market shows signs of strengthening.