Solana has displayed an impressive performance in the crypto market over the past three months, with its price seeing a sharp growth from around $160 to as high as $230. However, recent on-chain data shows a less optimistic picture underneath the surface.
Solana Network Activity On The Decline
In a Quicktake post on the CryptoQuant platform, pseudonymous analyst CryptoOnchain revealed that there has been an increasing negative divergence between Solana’s price and the number of active addresses working with its network.
The online pundit’s report was based on the Solana Daily Active Addresses Vs Sol Price metric. This metric tracks the relationship between Solana’s market price and the number of unique addresses actively interacting with its network over the past 90 days.
CryptoOnchain pointed out that as Solana began its rally around July from about $160 to $230, its network activity saw a stark opposite.
Source: CryptoQuant
In the chart shared by the on-chain analyst, we see a significant decline in the 7-Day Moving Average (MA) of active addresses. From the beginning of the third quarter, the 7-Day MA dropped from as high as 3.4 million to roughly 2.2 million addresses to end the period.
Adding an important caveat, the crypto analyst mentioned that the evaluation thrived on counting active addresses using the “Signer Method.” This method is important because “only unique addresses that have signed and sent successful transactions (success = true) are included,” thus providing analysts with a precise measure of users actively interacting with the network.
What’s Next For Solana?
CryptoOnchain further explained that the growing negative divergence currently occurring in the Solana market points to something interesting within the blockchain.
As of recent times, Solana’s price rally seems to be less driven by network adoption and user base activity, and rather by speculative activities, large-volume transactions by whales, or other market factors.
Looking at the bigger picture, it is evident that Solana’s — and any blockchain’s — health depends on consistent network activity. A network of active participants would witness healthy transaction demand, which could further contribute to the growth of the concerned cryptocurrency.
For now, the SOL price still maintains a healthy bullish structure as it looks to resume its run to the upside. If user activity, however, continues to weaken as its price momentum persists, the market could struggle to keep up once all speculation driving its current growth fades.
As of this writing, Solana is valued at about $186, reflecting an over 15% decline in the past 24 hours. This deep correction comes on the back of the United States President Donald Trump’s declaration of a 100% tariff on Chinese goods.
The price of SOL on the daily timeframe | Source: SOLUSDT chart on TradingView
Featured image from Getty, chart from TradingView
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