Investors are closely scrutinizing Solana’s on-chain data and derivatives, as fears mount that the SOL price might continue its downward trend despite a potential broader market recovery. However, recent data suggests a possible reversal, hinting at a bull run that could push SOL above $160, a level last seen five weeks ago. Solana’s decentralized applications (DApps) have shown significant improvement, with a 19% increase in active users and a 12% rise in DApp volumes over the past week. Additionally, the futures market for SOL indicates balanced demand between buyers and sellers, showing no signs of stress. Could this be the beginning of a bullish turnaround for Solana?

Important Data for Solana

In terms of decentralized applications (DApps) activity, Solana has recently fallen short of being a top competitor, but data over the past seven days shows significant improvement while many of its rivals face declines. The data indicates that while Ethereum, BNB Chain, and Polygon saw a decrease in active users, Solana’s active users increased by 19% over the past seven days. Similarly, Solana DApps volumes reached $703 million during the same period, a 12% increase from the previous seven days. Meanwhile, market leader Ethereum faced a 37% decline in volumes.

Solana’s decentralized exchange Raydium saw a 39% increase in seven days, accumulating an impressive 1.71 million active addresses. In comparison, BNB Chain’s leading DApp Move Stake had 198,570 active addresses during the same period. This surge in activity highlights Solana’s growing ecosystem and its potential to attract more users and developers.

Key Details About Solana

Finally, it’s essential to analyze the futures markets for SOL. Perpetual contracts, also known as inverse swaps, include an embedded rate recalculated every eight hours. Essentially, a negative rate indicates that short positions (sellers) are using higher leverage. Specifically for SOL, the eight-hour funding rate turned negative between July 5 and July 6, but the indicator is currently near zero, showing balanced demand between long positions (buyers) and short positions.

While it’s impossible to determine what could restore investor confidence in SOL and push its price back to $160, data from on-chain and futures markets show no signs of stress. This balanced demand suggests that the market is stabilizing, which could be a positive sign for Solana’s future price movements.

Factors Contributing to SOL’s Downturn

Despite Solana’s exceptional performance throughout 2023, witnessing a remarkable 900% surge from around $10 at the beginning of the year, a temporary pullback was anticipated. Market indicators, particularly elevated fund rates for derivative positions, hinted at an overheating market, prompting traders to shift their assets from SOL to stablecoins. This move aimed to secure profits and reduce exposure to the potential volatility associated with SOL.

Over three days, about $32 million in leveraged positions were liquidated due to insufficient margins, making SOL drop. Solana’s meme tokens like BONK and WIF also fell by over 50% from their highs in December, showing people are taking profits and losing interest in these risky assets.

BNB’s Surge and SOL’s Decline

Amid Solana’s downturn, Binance Smart Chain’s BNB surged by 9% in 24 hours, reclaiming its spot as the fourth-largest cryptocurrency by market cap, displacing Solana. BNB holds a $6 billion lead over SOL in market cap, but SOL boasts significantly higher daily trading volume. Meanwhile, BNB is nearing a critical resistance at $340, signaling a potential turning point based on technical indicators.

On the other hand, the SOL price continues to struggle to break clear of its $100 resistance level, indicating a significant liquidation point. SOL had been trading within a consolidated range of $65.90 to $79.65 for nearly two weeks. Recently, after numerous attempts, the bulls successfully breached the resistance at $79.65, resulting in a remarkable 39% surge.

Resistance Levels in Solana

Considering that the upward trend is expected to continue into 2024, the rapidly rising prices could easily surpass $250. Currently, the SOL price is trading at $186, up 2.35% for the day, which could signify a positive continuation. As the leading cryptocurrency Bitcoin reclaims $70,000, a market recovery could lead to momentum gains for altcoins.

According to Fibonacci levels, the recovery in Solana’s price could extend the bull run and quickly surpass the $200 mark. If the bull run continues, the $200 level could easily lift the altcoin’s market value to $250, potentially leading to an all-time high formation. Consequently, the cryptocurrency is performing well during the market’s recovery week, rising above the $80 billion valuation due to increased demand in the altcoin segment. Analysts believe it has an impressive comeback story with the potential to rise beyond $200 and up to $250.

Analyst Predictions for Solana

Former Ark Invest analyst Chris Burniske made a bold prediction for Solana (SOL), stating that the cryptocurrency could potentially triple its all-time high, reaching a price level of $750. This prediction is particularly striking given Solana’s recent underperformance and stagnation around the $120 mark. Solana’s price has experienced a significant slowdown lately. The $120 price point has become a challenging boundary for Solana and may reflect a loss of momentum compared to other tokens in the space. This stagnation can be partly attributed to operational issues overshadowing the network’s technological offerings.

Despite these setbacks, the analyst’s forecast of a significant increase in Solana’s value is based on the hypothesis that Ethereum’s network could become less attractive due to high fees, potentially directing users and developers towards Solana’s more cost-effective ecosystem. Even though Ethereum’s network congestion and fee structure are problematic, these issues alone may not be sufficient for a significant shift to Solana.

Network Issues in Solana

However, Solana’s growth is not solely dependent on Ethereum’s challenges. The cryptocurrency has high yield, low transaction costs, and a growing ecosystem that could rekindle investor interest. Solana boasts a strong support base from a robust community and ongoing project developments that could increase its utility and adoption.

As the network continues to evolve and resolve technical challenges, the opportunity for growth remains significant. Consequently, former Ark Invest analyst Chris Burniske predicts that Solana’s price could triple to $750. This forecast stands out against the backdrop of Solana’s recent poor performance and stagnation around $120. However, Solana’s growth prospects rely not on Ethereum’s difficulties but on factors such as high efficiency, low transaction costs, and a strong community.

Summary

Investors are closely watching Solana’s on-chain data and derivatives for signs of a potential bullish turnaround. With significant improvements in DApp activity and balanced demand in the futures market, Solana shows promising signs of recovery. While challenges remain, including competition from other blockchain networks and market volatility, Solana’s strong community support and ongoing developments could pave the way for a remarkable comeback. Whether Solana will reach new highs or face further downturns, the coming weeks will be crucial in determining its trajectory in the ever-evolving cryptocurrency landscape.

The author does not own or have any interest in the securities discussed in the article.