Could the performance of the Solana ecosystem be linked to SOL’s inability to surpass the $200 mark? In the initial months of 2024, this cryptocurrency displayed a resilient demand that facilitated a resilient recovery after every downturn. However, recent trends suggest a different story for SOL’s recent struggles.
Over the past three months, SOL has experienced weaker rebounds, a trend that seems to correspond with certain observations within the Solana network. Notably, the growth of Solana’s market capitalization this year has shown an intriguing relationship with SOL’s price movements.
By the end of August, Solana’s stablecoin market capitalization briefly exceeded $4 billion before witnessing significant outflows, bringing it down to $3.72 billion. A comparable decline was last observed between mid-April and late June.
During the April to June period, the cryptocurrency faced challenges in reaching the $200 mark. Similarly, recent bullish endeavors have struggled to gain significant traction.
Is Solana Experiencing a Slowdown in Network Activity?
Demand for Solana’s stablecoin has surged during periods of heightened market activity. The surge was primarily fueled by strong interest in memecoins in the first quarter of 2024. However, the frenzy around memecoins appears to have waned, particularly post-June.
An indication of the network’s activity slowdown can be derived from network fees. Peak fees were recorded in March, coinciding with the period of highest network utilization and demand.
While network fees were influenced by SOL’s valuation, which in turn was linked to market demand, they may not provide a holistic evaluation of network performance. The Solana stablecoin market capitalization serves as a more reliable indicator, particularly regarding on-chain transactions.
Transaction volumes peaked in April, declined, and then saw a secondary peak in July. Subsequently, transaction activities have decelerated, mirroring the downturn in network usability.
The data indicates a noticeable decrease in network demand over the last three months, leading to a weakening of the organic demand that previously supported SOL’s value in the first half of the year.
These trends might account for SOL’s recent challenges in recovering its value effectively.