Solana’s native token, SOL (SOL), experienced a 10% decline between Oct. 1 and Oct. 9 and is currently struggling to maintain the $140 support level. Despite this bearish momentum, SOL’s 30-day performance closely mirrors the altcoin market, which saw a modest 4% gain during the same period.
To determine whether SOL can revisit the $190 level seen in late July, it is necessary to analyze the positioning of derivatives traders and assess how the Solana network has performed against its competitors, including metrics such as trading volumes and deposits. Increased activity suggests future demand for SOL to cover blockchain processing fees.
Mixed Solana onchain metrics cast no clear trend for SOL price
While there is no guarantee that increased use of the Solana network will positively impact the price of SOL, part of its value is derived from expectations of adoption. For example, when new decentralized applications (DApps) emerge, traders often accumulate SOL to participate in airdrops, point distributions, and similar incentives.
Onchain analysis can clearly demonstrate whether network activity has declined since the price of SOL fell from $190 in late July. Additionally, comparing this data with competing blockchains is worthwhile to determine whether SOL has room to outperform in the coming months.
According to DefiLlama data, Solana’s network recorded an average daily volume of $1.8 billion in the second half of July, compared to the more recent average of $1.2 billion. This 33% decline was more significant than that of competitors, with Ethereum volumes decreasing by 7% during the same period, from $1.5 billion per day to the current $1.4 billion average.
Meanwhile, BNB Chain activity, measured by onchain volumes, increased by 48%, rising from $485 million per day in late July to the current average of $720 million. Therefore, when analyzing DApp activity, it can be inferred that there is no basis for SOL to outperform competitors solely based on expectations of demand for network processing fees.
However, not all DApps require large volumes, including staking services, games, collectibles, and social networks. Thus, it is worthwhile to examine the growth in Solana network deposits as measured by total value locked (TVL). As the deposit base increases, the short-term supply available for sale decreases, which analysis suggests is positive for the price of SOL.
Solana network TVL stood at 37.7 million SOL on Oct. 8, up from 35.8 million SOL one month earlier. Although this 5% increase may seem modest, it indicates a different dynamic compared to competitors. Ethereum network TVL declined by 2% to ETH 18.7 million over thirty days, while BNB Chain deposits decreased by 6% to BNB 7.7 million.
Positive TVL highlights for Solana include Raydium, which gained 35% over thirty days, reaching $1.21 billion, and Jupiter, which rose 17% to $1.23 billion. Similarly, Sanctum experienced a 29% increase in deposits to $962 million. Therefore, despite lower onchain volumes, Solana network activity remained robust as inflows into its DApps offset the decline.
Derivatives traders are more comfortable with bullish SOL positions
Demand for leverage should be analyzed using SOL futures contracts, which serve as key indicators of investor risk appetite. When the market is optimistic, the funding rate on perpetual contracts turns positive. Rates between 0.2% and 1.2% per month generally suggest neutral market conditions, while rates below this range are considered bearish.
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Data shows that the funding rate for SOL briefly turned negative on Oct. 8 but returned to a neutral stance on Oct. 9. The current 0.01% fee every 8 hours equates to 0.9% per month, which is not burdensome for traders maintaining leveraged long (buy) positions.
Onchain and derivatives data indicate that the price of SOL continues to track the broader altcoin market, suggesting there is no apparent reason for an outperformance toward $190 or higher.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
