Solana on-chain and derivatives information spotlight the restrictions of SOL’s potential value breakout

Solana noticed two constructive developments this week with the launch of the Saga Android-based smartphone powered by Solana blockchain and the retail buying and selling debut of Grayscale’s Solana Belief shares.

The developments together with bullishness within the broader market, boosted the worth of SOL by 29.05% from April 11 to a month-to-month excessive of $26.03.

Whereas the cell launch positively boosts the Solana ecosystem, the Saga telephone seems overpriced at over $1,000 apiece. However, the smartphone obtained constructive opinions in consumer expertise and high quality.

Unbiased cryptocurrency investor, Amy Wu, famous that “Saga-exclusive dApps, video games, and rewards because the telephone ships globally, which will even make it simpler to justify the $1,000 premium value.” It stays to be seen how the Solana Basis leads the advertising efforts for the telephone in opposition to current giants like Samsung and Apple.

The Grayscale fund has solely $2.9 million in property below administration (AUM) within the Solana Fund, which is significantly much less in comparison with the 24-hour day by day buying and selling quantity of SOL, which surpassed $500 million, to have an effect on value.

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 variety of day by day transactions on Solana reached a brand new all-time excessive in April, displaying a constant uptrend. Nonetheless, the day by day lively accounts have dipped to new lows, which raises some considerations.

Solana day by day lively accounts and variety of transactions. Supply: Nansen

Solana’s DeFi ecosystem subsided after FTX’s collapse, with vital liquidity drained. The entire deposits on Solana DeFi functions are lower than $300 million, with Solana knocked out of the highest ten 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 backseat. It seems that NFTs are carrying the ecosystem.

Solana’s market share in NFT buying and selling rose from 6% to 14% of complete NFT gross sales quantity in lower than a 12 months by February 2023, in line with a Delphi Digital report. It’s the second-largest NFT ecosystem after Ethereum. The report added,

“The Solana NFT ecosystem is pushed by merchants who’re extra financially incentivized and commerce much more typically in comparison with Ethereum NFT customers.” Nonetheless, the NFT buying and selling volumes have declined since February 2023 beneath the November 2022 stage, which is a discouraging signal.

NFT buying and selling volumes on Solana marketplaces. Supply: Nansen

Moreover, the good cash exercise has additionally compressed considerably with fewer spendings and features made by “good cash” wallets. Nansen tags prolific and lively buying and selling addresses as “good cash.”

Sensible cash income (blue), spending (pink), and internet cash stream (inexperienced). Supply: Nansen

Solana value motion

The Open Curiosity (OI) volumes for SOL futures, which represents the variety of open positions for SOL contracts, surged towards a 2023 excessive with a spike from $239 million to $365 million within the 48-hours following April 11, in line with information from Coinglass.

The rise in SOL’s value coincides with the OI quantity surge, suggesting that derivatives volumes are driving the most recent uptrend.

Open Curiosity quantity for SOL futures contracts. Supply: coinglass

The rise in OI volumes additionally accompany a surge within the funding charges for perpetual swap contracts, suggesting that leverage merchants are bullish on the token. It is a bearish contrarian sign because the market often runs the stops of crowded perpetual orders.

Funding price for SOL perpetual swaps. Supply: Coinglass

The SOL/USD pair faces resistance from the 50-day exponential shifting common (EMA) at $25.40 and the 2022 breakdown ranges round $29.76. The Shifting Common Convergence Divergence (MACD) indicator, a momentum indicator, exhibits a divergence between the worth surge and the MACD indicator, hinting at a doable pullback. Help for the pair lies across the $20 stage.

Associated: SOL value dangers 20% drop regardless of Grayscale Solana Belief’s retail debut

SOL/USD value chart. Supply: TradingView

The Solana ecosystem’s progress in NFT buying and selling volumes has been spectacular, but it surely 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 counsel that derivatives volumes are driving the most recent uptrend. Total, whereas Solana has had constructive developments, it stays to be seen how the ecosystem will maintain the worth progress.