Solana TVL Hits 1-Year High – Will SOL Price Follow?

The Solana native token has failed to break above the $150 resistance level since August 12. However, some network metrics have shown strength, including the decentralized applications' total deposits, which have since increased to record levels. Oct 2022. Traders are now asking whether these improvements in network fundamentals will be enough to push SOL prices back to $190, and what factors are hindering performance.

Prospects for the Solana spot ETF in the US have declined

One reason for the lack of enthusiasm among investors is Cboe Global Markets' recent decision to remove the 19b-4 forms for Solana spot exchange-traded funds (ETFs) from its website on August 16. Some market participants, including financial lawyer Scott. Johnson points out that the U.S. Securities and Exchange Commission informally rejected Solana's ETF, consistent with Chairman Gary Gensler's previous position.

Eric Balchiunas, senior ETF analyst at Bloomberg, expressed a similar opinion, while the S-1 filings from ETF issuers remain active, but the chances of approval are slim, the only hope should be a change in the current SEC administration. Donald Trump won the US presidential election. As a result, investor optimism regarding the launch of Solana's ETF space has waned, reducing the immediate impact of Solana's network metrics.

Crypto trader and investor CoinMamba, for example, believes that Solana's appeal has decreased as Ethereum's average fees dropped to $1 for the first time since July 2020, while other blockchains are gaining momentum with memecoin launches, a significant driver of demand for the SOL token. .

CoinMamba also suggests that Solana “needs to find a new narrative”, which can bring competitive advantage to SOL by exploring new areas and discovering decentralized applications (DApps). However, this analysis ignores the $620 million withdrawal of PayPal USD (PYUSD), a stablecoin released on the Solana network, even though it was launched less than three months ago in May 2024.

Moreover, several projects continue to be built on Solana, many of which are backed by multi-million dollar financing from experienced capitalists. For example, Colosseum, the company responsible for managing Solana's hackathon programs, recently raised $60 million to accelerate ecosystem growth, and Decentralized Autonomous Wireless Network (DAWN), a decentralized broadband startup, recently raised $18 million.

The growth of Solana TVL has not been accompanied by increased activity.

Although success is not guaranteed, the development of the Solana ecosystem is undeniable, as evidenced by the increasing Total Value Locked (TVL) on the network, which suggests that there is still room for improvement in the value of SOL. In the year On August 22, Solana Network DApps hit the highest level since October 2022 with 34.9 million SOL, a 13.7% increase from last month.

Highlights in the past 30 days include decentralized exchange Jupiter, whose TVL reached $1.06 billion, and Camino, a lending and leverage platform that currently has $1.48 billion in deposits. It's worth noting that Solana has $5 billion in TVL in US dollars, which is $4.5 billion more than its closest competitor, BBNB China.

While TVL growth is generally a positive sign, it does not indicate an increase in user numbers or activity as most DApps do not require large deposits. The number of unique active addresses connecting to apps is a very reliable proxy for measuring the actual number of users.

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Over the past 30 days, Solana's top DApps have experienced a drop in user numbers by half, with much of the growth centered on Radium, the recently launched high-risk decentralized finance platform. Conversely, some projects that have attracted attention, such as Helio, Solund and Marginfi, have seen less than 50,000 active addresses each. Therefore, Solana's TVL growth alone is not enough to support a SOL price rally targeting $190 or higher.

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.