SOL will struggle to recover $145, but the fundamentals of Solana’s network remain strong.

Solana Network native SOL ( SOL ) has failed to close above $145 since July 3. This poor performance can be partially attributed to a decrease in investor interest in cryptocurrencies, which reduced the sector's overall market capitalization by 5%. in nine days. Despite this, SOL underperformed its competitors between July 3 and July 12, trading 7.8%, while BNB (BNB) and Ether (ETH) fell 6.5% over the same period.

Although the broader cryptocurrency market has recovered some of its losses, traders now fear that SOL's bearish pace will continue. However, Solana's on-chain metrics and SOL derivatives suggest a reversal may be underway, paving the way for a bull run above $160 last seen five weeks ago.

Solana TVL is facing the deputy leader BNB Chain.

Some of the Solana SPL tokens are performing very poorly, which also explains the decrease in demand for SOL. When Solana ecosystem participants lose money, less money is distributed in the decentralized applications, thus positively affecting the demand for SOL. Highlights between July 3rd and July 12th include a 24% drop in DogWifHat (WIFF), an 18% loss in Helium (HNT) and an 18% correction in Gito (JETO).

In the grand scheme of things, SOL remains the fourth largest cryptocurrency excluding stablecoins, boasting a market capitalization of $65 billion. To put things in perspective, competitors Toncoin (TON) are worth $18.4 billion, TRON (TRX) is worth $12 billion, and Avalanche (AVAX) is worth $10.1 billion. Additionally, the Total Value Locked in Solana (TVL) was first matched with BNB Chain on July 5th, and since then the gap has narrowed.

According to Defillama data, BNB Chain had more than twice Solana's TVL by the end of 2023. The $2 billion benefit gap for BNB Chain has now disappeared, meaning traders are deploying significantly more capital on Solana's network. Solana's highlights include Liquid Gito with $1.6 billion in deposits, Marinade at $1.1 billion and Camino, also close to $1.1 billion at TVL.

Tron takes second place with $7.6 billion in TVL, but 72% of that comes from decentralized finance (DeFi) app JustLend. Analysts estimate that 94 percent of deposits come from a stripped-down version of bitcoin that lacks strong backup evidence. Basically, Solana competes directly with BNB Chain for second place in deposits.

Solana network activity grew in users and volumes

When it comes to decentralized applications (DApps) activity, Solana is far from a top contender, but its metrics have improved over the past seven days, while most competitors have suffered setbacks.

According to the data, Ethereum, BNB Chain, and Polygon saw their number of active users decrease, while Solana gained 19% in the last seven days. Similarly, Solana Daps volumes reached $703 million in the same period, a 12 percent increase over the previous seven days. Meanwhile, the market leader competitor Ethereum experienced a 37% decrease in volume.

Related: Crypto Transaction Volume to Exceed $108T by 2024, Europe Leads the Way

Solana's decentralized exchange Radium has amassed an impressive 1.71 million active addresses in just seven days, an increase of 39%. In comparison, BNB Chain's leading DApp, Move Stake, included 198,570 active addresses during the same period.

Finally, one should analyze the SOL futures markets. Perpetual contracts, also called reverse swaps, include an embedded rate that is calculated every eight hours. Basically, a negative ratio indicates that shorts (sellers) are using high strength.

Notably, SOL's eight-hour funding volume turned negative between July 5 and July 6, but the indicator is currently close to zero, indicating balanced demand between longs (buyers) and shorts. While it is impossible to determine what will cause SOL investors to gain confidence and push the price back to $160, the chain and volatility indicators show no signs of stress.

This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.