Solana Price Rebounds, but Declining TVL Raises Concerns for Bulls 📈🐂

After dropping to the $85s last week, the price of Solana (SOL) is now attempting to recover, despite a decrease in total value locked (TVL).

Solana price prediction Total value locked down by 20%. Is demand for SOL weakening?

solana

Following a recent retest of last week’s lows in the $85s, Solana (SOL) price is attempting to rebound. However, the declining total value locked (TVL) is a cause for concern for the bulls. Solana, also known as SOL, was last trading around $94, reflecting a 5% increase in price.

Solana has been moving higher in tandem with leading cryptocurrencies Bitcoin and Ethereum on Monday. Optimism surrounding the potential approval of spot Bitcoin ETFs in the US this week has driven the market’s sentiment. But, despite this positive momentum, Solana’s declining TVL, currently at $4.125 billion according to DeFi Llama data, is a warning sign.

TVL, or Trade Value Locked, refers to the dollar-denominated value of cryptocurrency locked within the smart contracts deployed on a blockchain. Solana’s TVL peaked on December 25th at $5.15 billion but has since declined by 20%. This decrease can be partially explained by the pullback in the price of Solana and Solana blockchain-issued assets. SOL is down about 25% from its December peaks, while the leading Solana meme coin, Bonk (BONK), has seen a significant decline of over 70% source.

However, the decline in TVL may also suggest a capital shift by DeFi investors and crypto traders away from Solana. Investors may have been reallocating their funds to other promising projects within the DeFi space.

Is Demand for Solana (SOL) Weakening? ❓

Price declines in major Solana ecosystem assets come at a time when other on-chain indicators also show signs of weakness. According to The Block, the seven-day moving average of active and new addresses engaging with the Solana network seems to have peaked and is now declining. This decrease in network activity signals a potential decline in demand for Solana source.

The seven-day moving average of value moved on-chain also appears to have reached a peak but remains at elevated levels. Additionally, total trading volumes across major Solana-based decentralized exchanges (DEXs) hit their lowest point in over a month. DEX volumes fell under $460 million on Saturday after surpassing $2.6 billion on December 21st source.

These weaker on-chain activities are indicative of a decline in fees collected by the Solana network from its users. The network collected fees amounting to $306,000 on Saturday, the lowest since December 20th source. Lower fees collected suggest a waning demand for Solana among its users.

Price Prediction – Where Next for Solana (SOL)? 🔮

Softening on-chain metrics could act as a headwind for SOL, indicating that short-term price predictions may remain bearish. Despite the SOL price still being up 450% from its September lows in the $17s, the cryptocurrency is still at a high risk of profit-taking. Traders who have seen substantial gains may decide to book profits amid the declining blockchain activity.

Moreover, chart analysis reveals a bearish descending triangle forming for SOL/USD in 2024. This pattern suggests a potential sustained break below the $86 support level in the near future source. While the upcoming approval of spot Bitcoin ETFs this week could have a significant impact on the market and the subsequent Solana price, it is uncertain whether it will reverse the bearish trend or exacerbate it.

If the market reacts positively to Bitcoin ETF approvals and risk appetite surges, SOL could quickly rally back towards December’s highs. Coupled with a resurgence in Solana network activity, this could lead to a sustained rally targeting the $140s. However, in the event of a “sell-the-fact” reaction to Bitcoin ETF approvals, Solana’s recent bearish trend is likely to continue.

Meme Coin Alternative to Consider – Meme Kombat 🎮🤣

While Solana has the potential to perform well, downside risks are high, and a significant portion of the gains may have already been realized, with the recent 450% rally. Investors seeking the opportunity for 100x gains may have missed their chance with SOL. Instead, they might want to explore a high-risk/high-reward crypto investment strategy that has gained popularity: investing in token presales.

At Blocking.net, we spend a lot of time analyzing presales with potential. One project that has caught our attention is Meme Kombat.

Meme Kombat merges the worlds of crypto gaming and gambling, offering a thrilling platform where users can bet on battles between characters based on popular meme coins from the crypto world. Early investors in Meme Kombat (MK) can also benefit from generous staking rewards of over 100% annually. Despite launching just weeks ago, the project has already raised close to $5.75 million.

Visit Meme Kombat to learn more.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. Remember, you could lose all of your capital.

Q&A: Reader’s Concerns Addressed 📚❓💡

Q1: What is TVL, and why is it important for Solana? TVL, or Total Value Locked, refers to the dollar-denominated value of cryptocurrency locked within the smart contracts deployed on a blockchain. It is an essential metric for evaluating the level of activity and investor interest in a blockchain platform. For Solana, a declining TVL may signal a decrease in demand and shifting capital away from the platform.

Q2: What are on-chain indicators, and why do they matter for Solana? On-chain indicators provide insights into the activity and health of a blockchain network. They include metrics such as active addresses, new addresses, value moved on-chain, and trading volumes. These indicators help assess the network’s user engagement, demand, and overall market sentiment. For Solana, weaker on-chain indicators can suggest a potential decline in demand and impact the price of SOL.

Q3: What is the descending triangle pattern, and how does it affect Solana’s price? The descending triangle pattern is a bearish chart formation that indicates a potential breakdown in price. It is formed by drawing a horizontal line at a specific support level and connecting lower highs with a downward sloping trendline. If Solana’s SOL/USD price breaks below the support level of $86, as indicated by this pattern, it could lead to further selling pressure and potentially lower prices.

Q4: What are the risks and rewards of investing in token presales? Investing in token presales can be highly risky but also offer the potential for significant rewards. By participating in presales, investors can access tokens at a discounted rate before they are listed on exchanges. However, these projects are typically early-stage and carry higher risks, including the possibility of losing the entire investment. Thorough research and due diligence are essential before participating in token presales.

References 📚🔗

  1. Strange: Solana Memecoin Blasts to $20,000, Billionaire Justin Sun Stacking Coin
  2. Ark Sells Remainder of GBTC Holdings, Invests $100M in Bitcoin ETF
  3. ETFs on the Tots Are Coming, ETFs Are Coming, ETFs Are ETFing – 20 Crypto Jokes
  4. Bitcoin ETF Approval Could Trigger Crypto Market Rally, Options Data Suggests
  5. Arbitrum’s Total Value Locked Surges Past $25 Billion as Token Nears $2
  6. Bonk Price Prediction: Bonk Falls 50% From Peak, Can It Recover?
  7. PancakeSwap Seeks $300M CAKE Token Supply Revamp
  8. Solana Price Prediction: Google Trends Show Rising Interest, Investors Shifting Focus to SOL

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