Why SOL has failed to rise despite Solana's thriving network

Contents

Solana’s network activity is increasing Solana investors are not happy

Solana’s TVL skyrocketed, reflecting the growth in the DeFi ecosystem.
SOL only rose 1% last month and market indicators remained bearish.

Solana [SOL] had an optimistic month in terms of network activity as it added a significant number of users.

However, the same could not be said about the token’s price action, which remained under the influence of bears during this period.

Solana’s network activity is increasing

Artemis recently posted a tweet revealing the top blockchains from the largest daily active users over the past month.

Solana did not make it into the top three, which was dominated by Fantom [FTM]Optimism [OP]and Basic. However, it had a promising 21% month-over-month increase.

Biggest winners from daily active users month over month:

1. Phantom
2. Optimism
3. Basic
4. Gnosis chain
5. Solana
6. Polygon zkEVM
7.Bitcoin
8. Close to protocol
9. Aptus
10. Zora Network

Are you surprised by any of these numbers? pic.twitter.com/F07XjNxcPL

— Artemis (@artemis__xyz) February 5, 2024

To see what other related metrics were like over the past month, AMBCrypto took a closer look at Artemis’ data facts. As rightly highlighted in the tweet, Solana’s daily active addresses have increased over the past 30 days.

As a result, the blockchain’s daily transactions remained high during the same period.

Source: Artemis

In terms of captured value, things also looked optimistic, as evidenced by the increase in numbers. For example, fees and income from the Solana stand remained high over the past month, with huge peaks on January 31.

Blockchain performance in the DeFi space also improved, evident from the substantial increase in Total Value Locked (TVL). At the time of printing, SOL‘s TVL was $1.66 billion.

Source: Artemis

Solana investors are not happy

Although the blockchain’s network activity soared, the price action of the original token did not match well.

According to CoinMarketCapThe price of SOL moved sideways over the past month, with prices rising just over 1%. At the time of writing, SOL was trading at $96.06 with a market cap of over $41.9 billion.

To see what went wrong, AMBCrypto checked SOL’s on-chain metrics. We found that SOL’s weighted sentiment remained negative for the majority of days over the past month.

This indicated that bearish sentiment around Solana was dominant in the market at the time of writing.

The Binance Funding Rate also remained in the green, meaning derivatives investors were actively buying SOL as price volatility remained low.

Source: Santiment

Another possible reason for SOL’s slow price movement could be the result of whale action.

AMBCrypto had reported rather how whales transferred SOL to an exchange in quick succession, indicating selling pressure.

Is your portfolio green? look at the SOL profit calculator

Glancing at Solana’s daily chart, the possibility of a few more slow-moving days seemed likely. The Bollinger Bands showed that the price of SOL was in a less volatile zone.

The MACD also showed the possibility of a bearish crossover. Nevertheless, SOL’s Money Flow Index (MFI) turned bullish and recorded a sharp increase.