- Solana demonstrates solid recovery as the market finds the bottom of the latest crash.
- Robust on-chain activity makes a comeback, painting a clear picture of market confidence.
Solana’s SOL has arguably been the golden goose of the top cryptocurrencies by market cap. Its meteoric rise since October last year attracted a lot of investors and traders.
Consequently, each dip that came along since then was followed up by a rapid recovery.
Can SOL hold on to the same status after the latest crash? The answer to that question may come down to one word. Attention. SOL was one of the few top coins that delivered a rally similar to what we saw in previous bull runs.
A big part of SOL’s success was because the Solana blockchain managed to hijack the memecoin narrative. The latter played out in the network’s favor this year, thus driving demand for SOL.
The recent market crash threatens to introduce a shift to the demand dynamics. The threat of the bullish phase being curtailed may introduce a more cautious approach, hence a shift from the memecoins focus.
Should you sell your SOL?
While the memecoin hype coming to an end is real, SOL’s price action may indicate something different. The cryptocurrency tanked by as much as 42% from its July lows to the bottom range of the recent FUD-filled retracement.
However, it also bounced back just as sharply as it fell.
The dip pushed SOL as low as $110 on 5th August. It exchanged hands at $139.87 at press time, courtesy of a 26% recovery.
Source: TradingView
It is also worth noting that despite the sell pressure, price still closed above a key support level at the $126 price range. A bold statement that signals what the market currently perceives as SOL’s bottom range.
The state of investor confidence in Solana
Our latest assessment of the Solana ecosystem disclosed that it experienced its highest daily on-chain volume spike on 5th August.
The same day that it rested the bottom range and bounced back. The volume peaked at $27.11 SOL, the second highest daily volume figure it achieved in the last two years.
Source: DeFiLlama
While part of the volume may indicate demand for SOL, it may also have had something to do with network activity in regards to demand for other assets within the network.
The lower SOL value presented a chance to buy other SOL-denominated assets at discounts. This idea is supported by one of the latest announcements from the Solana ecosystem.
This announcement further supports demand recovery within the Solana ecosystem. This could reignite strong ecosystem-driven demand that we mentioned earlier, that was responsible for SOL’s rapid recoveries.
Also in matters regarding confidence, Solana’s TVL seems to have held up quite well. Its TVL fell by roughly 4.76 million SOL on 5th August.
Equivalent to roughly $614.7 million. A relatively small dip compared to the billions in TVL outflows that we observed in Ethereum.
Source: DeFiLlama
Realistic or not, here’s SOL’s market cap in BTC’s terms
These combined data points indicated that the Solana ecosystem was able to weather the storm quite well. User confidences appeared intact so far, hence SOL may still regain its attractiveness to investors.
Nevertheless, it could still be prone to a possible support break if more sell pressure emerges.
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