SOL Decline Overview

SOL declined by 35.5% over the past months.
Solana’s daily Active Addresses and on-chain activity declined, signaling downward pressure.

Since hitting a local high of $195 three weeks ago, Solana (SOL) has experienced strong bearish pressure, dropping to a three-month low.

Causes of Decline

Analysis suggests that Solana is struggling fundamentally with low on-chain activity.

Solana’s On-chain Activity Decline

Solana’s chain activity has seen a steady decline over recent months. Consequently, the network’s number of daily active addresses has fallen to a three-month low of 3.5 million.

A decline in active users indicates reduced market interest and lower adoption, which often leads to reduced on-chain activity and price depreciation. Historically, fewer users correlate with price decline due to decreased demand.

This reduced on-chain activity is further evidenced by a drop in Decentralized Exchange (DEX) trading volume, which has fallen to a four-month low of $1.5 billion, suggesting waning trust in the network as investors lean towards Centralized Exchanges (CEX) for security reasons.

Additionally, Solana’s stablecoin transfer volume has plummeted to $7.1 billion, down from $394 billion a month ago, indicating that even large investors are considering other chains like Ethereum (ETH), reflecting a risk-off sentiment among SOL holders.

Impact on SOL

Reduced on-chain activity has negatively impacted SOL’s price movements and demand side. Low demand generally leads to less buying pressure, resulting in downward price trends.

As of the latest update, Solana was trading at a three-month low of $158, marking a 7.09% decline daily and a total drop of 35.52% over the past month. With ongoing downward pressure and low demand, SOL may decline further.

If this trend continues, SOL risks falling to $154, but there is potential for recovery to $175 if buyers act to capitalize on the dip.