Solana’s native token, SOL, experienced a 10% decline from October 1 to October 9, struggling to hold its $140 support level. Despite this downward trend, SOL’s 30-day performance still aligns with the broader altcoin market, which saw a modest 4% gain over the same period.
Evaluating Solana’s Potential for Price Recovery
To determine whether SOL can reach the $190 price level it saw in late July, it’s essential to analyze derivatives trading activity and Solana’s network performance compared to competitors. Metrics such as trading volumes and deposits are critical indicators of future demand for SOL, especially as increased activity could lead to higher usage fees.
Mixed On-Chain Metrics for SOL
While Solana’s adoption could potentially boost SOL’s value, it’s not guaranteed. Much of SOL’s price is tied to expectations of network growth and use. For instance, traders often accumulate SOL to participate in new decentralized applications (DApps) or for incentives like airdrops. Analyzing on-chain data can provide insight into whether Solana’s network activity has declined since SOL’s price fell from $190. Additionally, comparing this data with rival blockchains helps determine if SOL could outperform them in the future.
Solana’s Trading Volume Decline vs. Competitors
DefiLlama data reveals that Solana’s network recorded an average daily volume of $1.8 billion during the second half of July. This has since dropped to $1.2 billion—a 33% decline. By contrast, Ethereum’s daily volume only decreased by 7%, while BNB Chain saw a 48% increase, with its daily volume rising from $485 million to $720 million. Based on this DApp activity, Solana shows no clear advantage over its competitors in terms of demand for network processing fees.
However, not all DApps depend heavily on high transaction volumes. Staking services, gaming, collectibles, and social networks can thrive without such metrics. Therefore, analyzing Solana’s total value locked (TVL) offers additional insight. An increase in TVL suggests that more assets are being locked in the network’s smart contracts, reducing the circulating supply and potentially benefiting SOL’s price.
Positive TVL Growth Signals for Solana
As of October 8, Solana’s TVL stood at 37.7 million SOL, up from 35.8 million one month earlier—a 5% increase. Although this growth appears modest, it contrasts positively with its rivals. Ethereum’s TVL dropped by 2% over the same period, while BNB Chain saw a 6% decline.
Notable DApps on Solana have shown impressive growth. For example:
- Raydium: Up 35% in deposits, reaching $1.21 billion.
- Jupiter: Increased 17% to $1.23 billion.
- Sanctum: Saw a 29% rise, reaching $962 million.
Despite the overall drop in on-chain volumes, these inflows indicate strong engagement with Solana’s DApps, offsetting the decline in trading activity.
Derivatives Data Shows Bullish Sentiment
SOL’s futures market reveals that traders remain cautiously optimistic. The funding rate of SOL futures contracts—an indicator of demand for leverage—briefly turned negative on October 8 but returned to neutral on October 9. The current rate of 0.01% every 8 hours equals 0.9% per month, indicating neutral market conditions without significant costs for traders holding long positions.
