30s Summary

Solana (SOL) has experienced a 10% drop in its value, with data indicating decreased activity on the Solana network and a 33% drop in average daily volumes. While the total value locked (TVL) in the Solana network has shown a small increase, competition from other blockchains, such as BNB Chain and Ethereum, is strong. An analysis of onchain and derivatives data suggests that SOL’s price follows the broader altcoin market, making increase to $190 or higher uncertain. Various factors, like trading volumes, network activity, and the adoption of new decentralized applications, play a role in Solana’s future performance.

Full Article

The native token of Solana, SOL, has seen a drop of 10% in its value from Oct. 1 to Oct. 9, with a tough fight to keep its $140 support level. Even though it may seem a bit rough for SOL at the moment, its performance over the last 30 days somewhat matches the altcoin market, which saw a small 4% gain during the same timeframe.

Now, to understand whether SOL can bounce back to the $190 mark it reached in late July, we’ve got to look at a couple of factors. We need to study the position of derivatives traders, and check out Solana’s performance compared to its competitors. Factors such as trading volumes and deposits need to be considered. If activity is ramping up, it tells us there might be more demand for SOL in the future to cover blockchain processing fees.

That being said, it’s not a given that increased use of the Solana network will up the price of SOL. A lot of its value into the future is tied up with expectation of people adopting it. For example, when new decentralized apps (DApps) come onto the scene, traders often hoard SOL to get involved in giveaways, points, and other bonuses.

To really understand if network activity has dropped since SOL dipped from $190 in late July, we need onchain analysis. This data can show us if the network activity dropped when the price did. Comparing this with competing blockchains is super useful to see if SOL has a chance to outrun these guys in the future.

Based on data from DeFiLlama, volumes on Solana’s network averaged a daily $1.8 billion in the second half of July. Comparing this to a recent daily average of $1.2 billion, there’s been a 33% drop. This decrease is bigger than other competitors. For example, Ethereum volumes saw a 7% drop during the same period.

But there’s also winners out there! BNB Chain activity, based purely on onchain volumes, increased by 48%, rising from $485 million per day in late July to a current average of $720 million daily. So, when you look at activity on DApp, there’s no guarantee that SOL will beat its competitors based just on the demand for network processing fees.

However, remember that not all DApps need big volumes. Things like staking services, games, collectibles, and social networks don’t always require that. So it’s worth also checking out the growth in deposits on the Solana network, as measured by total value locked (TVL). If this deposit base grows, the number of SOL available for short-term sale decreases, which is usually good news for SOL’s price.

On Oct. 8, the Solana network’s TVL was 37.7 million SOL, an increase from 35.8 million SOL in the past month. Though a 5% increase might appear small, it shows a different outlook compared to competitors, such as Ethereum whose network TVL decreased by 2% over the same period.

There are other shining examples within the Solana ecosystem, like Raydium, which saw an increase of 35% over 30 days, reaching $1.21 billion, and Jupiter, which rose 17% to $1.23 billion. Similarly, Sanctum saw an increase in deposits by 29% to reach $962 million. So, even if there’s been a drop in onchain volumes, activity on the Solana network is still strong, with these inflows offsetting the downward trend.

In terms of SOL’s future positions, data shows the funding rate for SOL briefly dipped into the negatives on Oct. 8 but bounced back to be neutral by Oct. 9. The current 0.01% fee every 8 hours, or 0.9% per month, is quite manageable for traders holding leveraged long (buy) positions.

So, by looking at onchain and derivatives data, it seems the price of SOL is closely tracking the broader altcoin market, implying there’s no clear reason for it to outperform and rise above $190 or higher.

Just remember, this isn’t official investment advice. Always do your own research before making any investment decisions. There are risks involved in every move you make.

Source: Cointelegraph