The native token of Solana, SOL, saw a 12.8% increase between March 24 and March 26, but then experienced a downward correction to $186. However, investors remain hopeful and believe that the surge in activities like memecoins and airdrops on the Solana network could maintain SOL’s positive trajectory and potentially push its price above $200.
The cryptocurrency market as a whole faces vulnerabilities, especially after Bitcoin failed to hold above the $71,000 mark on March 26. This failure indicates a decline in investor confidence, particularly regarding the outflows from spot Bitcoin exchange-traded funds (ETFs). If institutional investors continue to reduce their stakes in listed crypto assets, the outlook for SOL and other alternative coins could worsen.
Additionally, SOL’s valuation may face further pressure due to recent legal actions taken by the U.S. Justice Department against KuCoin exchange and two of its founders. The U.S. Commodity Futures Trading Commission has accused KuCoin of offering unregulated and unlicensed derivatives contracts to U.S. customers, alleging that the exchange facilitated transactions involving over $5 billion in suspicious and criminal proceeds.
However, despite the short-term implications of Bitcoin’s spot ETF flows and regulatory uncertainties, the price of SOL tends to respond positively to growth within the Solana ecosystem. The success of Solana SPL tokens, particularly the popularity of memecoins, has increased the blockchain’s appeal to new projects and sustained demand for the SOL token.
An analysis of the Solana network over the past 30 days shows significant increases in user activity and volume, challenging a bearish stance on SOL. Solana has narrowed the gap with its competitor, the BNB Chain, according to available data.
Looking at decentralized application (DApp) volumes, Solana saw a 334% increase in the 30 days leading up to March 26, outperforming BNB Chain’s growth rate of 146% and Arbitrum’s growth rate of 82%. The Solana network also experienced a 43% surge in active addresses to 2.66 million over the same period, surpassing BNB Chain’s 15% growth and Arbitrum’s 30% growth.
To gauge market sentiment, investors should focus on derivatives trading metrics, particularly the behavior of perpetual contracts. A negative rate indicates stronger demand from short sellers. Recent observations show a strong leverage demand for bullish positions on SOL, despite the token’s inability to surpass the $195 mark on March 26.
Examining the demand for stablecoins in China can also provide insights into market sentiment. The premium on USD Coin (USDC) transactions in China remained above 3% on March 26, indicating a strong demand for converting local CNY into the USDC stablecoin. This suggests sustained interest in cryptocurrencies within China and supports the optimistic outlook for SOL’s derivatives markets.
While it remains uncertain when SOL will surpass the $200 threshold, current on-chain and derivatives metrics suggest a healthy market environment. It’s important for readers to conduct their own research and make informed decisions as this article does not contain investment advice or recommendations.