Solana noticed two constructive developments this week with the launch of the Saga Android-based smartphone powered by the Solana blockchain and the retail buying and selling debut of Grayscale Solana Trust shares.
The developments, together with bullishness in the broader market, boosted the price of Solana (SOL) by 29.05% from April 11 to a month-to-month excessive of $26.03.
While the cellular launch positively boosts the Solana ecosystem, the Saga cellphone seems overpriced at over $1,000 apiece. Nevertheless, the smartphone acquired constructive opinions in person expertise and high quality.
Independent cryptocurrency investor Amy Wu famous that there are rather a lot of alternatives for extra “Saga-exclusive dApps, games, and rewards as the phone ships globally, which will also make it easier to justify the $1k premium price.” It stays to be seen how the Solana Foundation will lead the advertising efforts for the cellphone towards present giants like Samsung and Apple.
The Grayscale Solana Trust has solely $2.9 million in belongings underneath administration — which is low in comparison with the 24-hour each day buying and selling quantity of SOL, which surpassed $500 million — and is unlikely to have an effect on price.
There are additionally warning indicators of lack of progress throughout on-chain metrics and bullishness throughout the derivatives market, threatening a steep correction.
NFTs carry the Solana ecosystem
The quantity of each day transactions on Solana reached a brand new all-time excessive in April, exhibiting a constant uptrend. However, the quantity of each day lively accounts have dipped to new lows, which raises some considerations.
Solana’s decentralized finance (DeFi) ecosystem subsided after FTX’s collapse, with vital liquidity drained. The whole deposits on Solana DeFi functions are lower than $300 million, with Solana knocked out of the prime 10 DeFi blockchains by liquidity worth locked, per DefiLlama.
DeFi utilization throughout the Solana ecosystem has been restricted to liquidity staking protocols, with decentralized exchanges and lending protocols taking a again seat. It seems that nonfungible tokens (NFTs) are carrying the ecosystem.
Solana’s market share in NFT buying and selling rose from 6% to 14% of whole NFT gross sales quantity in lower than a 12 months by February 2023, based on a Delphi Digital report. It is the second-largest NFT ecosystem after Ethereum.
The report added, “The Solana NFT ecosystem is driven by traders who are more financially incentivized and trade a lot more often compared to Ethereum NFT users.”
However, the NFT buying and selling volumes have declined since February 2023 under the November 2022 stage, which is a discouraging signal.
Additionally, the good cash exercise has additionally compressed considerably, with fewer spending and positive factors made by “smart money” wallets. Nansen tags prolific and lively buying and selling addresses as “smart money.”
Solana price motion
The open curiosity (OI) quantity for SOL futures, which represents the quantity of open positions for SOL contracts, surged towards a 2023 excessive with a spike from $239 million to $365 million in the 48-hours following April 11, based on data from Coinglass.
The rise in SOL’s price coincides with the OI quantity surge, suggesting that derivatives volumes are driving the newest uptrend.
The rise in OI volumes additionally accompanies a surge in the funding charges for perpetual swap contracts, suggesting that leverage merchants are bullish on the coin. This is a bearish contrarian sign, as the market often runs the stops of crowded perpetual orders.
The SOL/USD pair faces resistance from the 50-day exponential shifting common at $25.40 and the 2022 breakdown ranges round $29.76. The shifting common convergence/divergence (MACD) indicator, a momentum indicator, reveals a divergence between the price surge and the MACD indicator, hinting at a potential pullback. Support for the pair lies round the $20 stage.
Related: SOL price dangers 20% drop regardless of Grayscale Solana Trust’s retail debut
The Solana ecosystem’s progress in NFT buying and selling volumes has been spectacular, however it has declined since February 2023, and the good cash exercise has compressed considerably.
The rise in open curiosity volumes for SOL futures and funding charges for perpetual swap contracts might recommend that derivatives volumes are driving the newest uptrend. Overall, whereas Solana has had constructive developments, it stays to be seen how the ecosystem will maintain the price progress.
The views, ideas and opinions expressed listed here are the authors’ alone and don’t essentially replicate or signify the views and opinions of Cointelegraph.
This article doesn’t include funding recommendation or suggestions. Every funding and buying and selling transfer entails danger, and readers ought to conduct their very own analysis when making a call.
