Solana’s Token Faces Challenges But Potential Remains
Solana’s native cryptocurrency, SOL, experienced a setback after peaking at $134 on April 14. Despite this decline, various indicators suggest that the altcoin may still have the potential for a rebound. Currently, SOL is trading about 57% lower than its all-time high, a decline attributed in part to reduced activity in decentralized applications (DApps). Nonetheless, analysts point to a notable increase in deposits on the Solana network as a promising factor that could support a short-term price recovery.
Solana Dominates in Total Value Locked
With a total value locked (TVL) of $6.9 billion, Solana has cemented its position as the second-largest blockchain in this category. After achieving a 12% increase over the week ending April 16, Solana has outpaced rivals like Tron, Base, and Berachain. Key metrics include a 30% rise in deposits on Sanctum, a liquid staking platform, and a 20% increase in deposits on both Jito and Jupiter.
DEX Volumes on Solana Outshine Ethereum Layer-2 Solutions
While Solana’s TVL may appear comparable to that of Ethereum’s layer-2 solutions, it is crucial to highlight Solana’s strength in decentralized exchange (DEX) trading volumes. In the week ending April 16, the trading volume on Solana DApps reached $15.8 billion, surpassing the combined trading volumes of Ethereum’s layer-2 solutions by over 50%. Solana regained its lead in DEX activity, achieving a 16% increase in that timeframe, bolstered by a 44% rise in Pump-fun’s volume and a 28% increase on Raydium. Conversely, the three largest Ethereum DApps—Uniswap, Fluid, and Curve Finance—saw their trading volumes decline.
Broader DApp Growth Beyond DEXs
It would be misleading to evaluate Solana’s progress solely based on DEX metrics, as other decentralized applications handle much smaller trading volumes. For instance, Ondo Finance managed to tokenize $250 million worth of assets on the Solana network. Additionally, Exponent, a yield farming protocol, doubled its TVL in the past month, while the yield aggregator Synatra saw a 43% increase in its TVL over the last week.
Future Outlook for Solana with Potential ETF Approval
Analysts are optimistic about the possibility of a Solana spot exchange-traded fund (ETF) gaining approval in the United States by 2025. However, expectations for substantial capital inflows remain tempered due to a general lack of interest from institutional investors, especially in light of the recent underperformance of Ethereum ETF offerings. If such an ETF is approved, it could significantly enhance Solana’s market presence, particularly if the U.S. government’s plans for a Digital Asset Stockpile materialize.
Investors Awaiting Crypto Audit, Rally Challenges Ahead
Investors are keenly anticipating a comprehensive audit of U.S. federal agencies’ cryptocurrency holdings, which was initially expected by April 7. However, the missed deadline has led some to speculate that the executive order signed on March 7 did not mandate public disclosure of the findings. Regardless of whether SOL is included in that report, the government currently has no plans to acquire cryptocurrencies beyond Bitcoin (BTC). At this point, there are few factors that could lead to a price rally back to the $180 mark, a level not seen since March 2. Without significant external catalysts to draw new participants into the crypto market, the increase in TVL and DEX share alone may not be sufficient to propel SOL’s price beyond broader market trends.
This article is intended for informational purposes only and should not be interpreted as legal or investment advice. The opinions expressed here are solely those of the writer and do not necessarily reflect the views of any affiliated organizations.
