Solana’s native token, SOL, has faced challenges reclaiming the $145 mark since July 3. Despite this, Solana’s on-chain and derivatives metrics remain robust, suggesting potential for a rally to $160.
Market Performance
SOL has struggled to close above $145, primarily due to reduced investor interest in cryptocurrencies. This decline led to a 5% drop in the sector’s overall market capitalization over nine days. From July 3 to July 12, SOL fell 7.8%, underperforming BNB and Ether, which declined 6.5%.
Traders worry that SOL’s bearish trend may persist even if the broader cryptocurrency market recovers. However, Solana’s solid on-chain metrics and derivatives suggest a possible reversal, potentially driving SOL above $160.
Solana’s Total Value Locked (TVL)
Solana’s ecosystem has seen some setbacks, with certain SPL tokens underperforming. For instance, DogWifHat (WIF) dropped 24%, Helium (HNT) fell 18%, and Jito (JTO) corrected by 18% between July 3 and July 12. These declines have reduced demand for SOL as less capital circulates within Solana’s decentralized applications (DApps).
Despite these challenges, SOL remains the fourth largest cryptocurrency (excluding stablecoins) with a market capitalization of $65 billion. In comparison, Toncoin (TON) holds $18.4 billion, Tron stands at $12 billion, and Avalanche at $10.1 billion. Significantly, Solana’s TVL matched BNB Chain for the first time on July 5, narrowing the gap ever since.
Comparing Solana and BNB Chain
According to DefiLlama, BNB Chain had over twice Solana’s TVL by the end of 2023. This $2 billion gap has now closed, indicating increased capital deployment on the Solana network. Solana’s highlights include liquid staking Jito with $1.6 billion in deposits, Marinade with $1.1 billion, and Kamino nearing $1.1 billion in TVL.
Tron holds the second position in TVL terms with $7.6 billion, but 72% of that comes from JustLend, raising concerns about the solidity of its reserves. Consequently, Solana is directly competing with BNB Chain for the second place in TVL.
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Growing Network Activity
Solana has seen growth in user and volume activity. While Ethereum, BNB Chain, and Polygon experienced declines in active users, Solana’s user base grew by 19% over the past seven days. Solana DApps volumes also increased by 12% to $703 million, contrasting with Ethereum’s 37% decline.
Solana’s decentralized exchange, Raydium, saw a 39% increase in active addresses, reaching 1.71 million in seven days. In comparison, BNB Chain’s leading DApp, Move Stake, had 198,570 active addresses.
Analyzing SOL’s futures markets, the eight-hour funding rate for perpetual contracts turned negative between July 5 and July 6. However, it is now near zero, indicating balanced demand between buyers and sellers. While it’s uncertain what might boost investor confidence, Solana’s on-chain and derivatives metrics show no signs of stress.
