Solana (SOL) has recently made headlines, trading at $144 at press time. While this marks a significant bounce from a multi-month support level, it’s crucial to note that SOL is down by approximately 6% over the past 30 days. The cryptocurrency landscape has seen a resurgence, with Bitcoin (BTC) and various altcoins experiencing gains, contributing to a recovery for Solana. Last week, SOL rallied impressively, climbing from $127 to $151. However, as the rally shows signs of exhaustion, the pressing question is: does on-chain data support a bullish outlook that could propel SOL prices to $200?
Active Addresses – A Double-Edged Sword
Recent data from Artemis indicates a mixed bag when it comes to Solana’s active addresses. On one hand, the monthly active addresses recently hit a record high. On September 19th, daily active addresses reached a peak of 5.5 million, signaling robust engagement. However, this uptick was short-lived, with numbers now down to 3.5 million. This decline raises concerns about the sustainability of the recent price rally. For SOL to hit that ambitious $200 target, a significant increase in network activity is essential. The drop in daily active addresses suggests that user engagement is slowing, which could hinder further price growth.
DApp Volumes – A Cause for Concern
Additionally, DApp activity on Solana has been underwhelming in the last 30 days, as highlighted by DappRadar. DApp volumes plummeted to $121 million, a stark contrast to the over $400 million recorded in late August. This significant decline is echoed by decreased transaction numbers and Unique Active Wallets (UAWs). For Solana to extend its gains, it is imperative that demand for the token rises as users engage with decentralized applications (dApps) built on the blockchain. Without renewed interest in these applications, SOL may struggle to maintain its current price trajectory.
Despite these challenges, there is a silver lining in the form of decentralized finance (DeFi). Solana’s Total Value Locked (TVL) recently surpassed $5 billion for the first time this month, according to DeFiLlama. This represents an addition of more than $500 million in just two weeks. A thriving DeFi sector could positively impact SOL’s price as users demand the token to settle transactions on various protocols. Notably, the protocol Jupiter has played a pivotal role in driving this DeFi boom, with its TVL reaching an all-time high.
Also Read: Unlocking $7 Trillion – How Solana (SOL) Could Revolutionize The Securities Industry
Market Sentiment – A Cautious Outlook
As Solana’s network metrics reveal mixed signals, the long/short ratio suggests a cautious market sentiment. Currently, there are slightly more short positions than long ones, indicating that traders are not entirely convinced of Solana’s ability to break through the $200 barrier in the near term. This lack of confidence could stifle further bullish momentum unless a significant shift occurs in user engagement and DeFi activity.
In summary, while Solana has demonstrated remarkable resilience and potential for growth, various indicators suggest a complex path ahead. The decline in daily active addresses and DApp volumes raises concerns about sustained engagement on the network. However, the burgeoning DeFi sector offers a glimmer of hope. If Solana can rekindle user interest and drive demand for its token, a rally toward $200 could still be within reach. Investors and traders alike will be watching closely as the market navigates these mixed signals in the coming weeks.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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