SOL reclaims $72, but onchain data flags weakening momentum
Solana's native token SOL jumped to $72, driven by tokenized stock trading growth, but onchain data shows weakening momentum due to declining TVL and DEX volumes. SOL's price increase is attributed to the growth of tokenized stock trading on its network.
Intelligence analysis by Llama 3.3 70B
Solana's SOL token has rebounded to $72, but its onchain data indicates weakening momentum, with a declining Total Value Locked (TVL) and low DEX volumes, raising concerns about the sustainability of its price increase.
Solana's token price went up to $72 because more people are trading tokenized stocks on its network. However, the network's overall activity is decreasing, which could mean the price won't stay high for long.
Analysis
Tokenized Stock Trading Growth
The growth of tokenized stock trading on Solana's network has been a key driver of its recent price surge. According to Jupiter Aggregator data, tokenized stocks on Solana traded over $113 million in 24 hours, with the AI sector being a major contributor to this growth. However, the relatively thin liquidity in the automated market-making pools raises concerns about the sustainability of this growth.
The tokenization platform xStocks has posted 31% growth in TVL, which is a positive sign for the network. However, the dependence on Pump.fun, a token launch platform that relies heavily on memecoin activity, is a concern. A CoinGecko report revealed that 80% of the 18.7 million tokens launched in less than 48 hours, while 55% of the addresses involved lost up to $1,000 according to Dune data.
Onchain Data Highlights Weakening Momentum
Despite the growth of tokenized stock trading, Solana's onchain data indicates weakening momentum. The Total Value Locked (TVL) on the Solana network dropped 11% over the past month, while the Ethereum layer-2 Base reduced the gap. Negative highlights on Solana TVL include a 19% decline in Kamino, a 20% trim by Binance Staked SOL, and a 17% decline in Raydium.
Decentralized exchange (DEX) volumes on Solana fell to $10 billion per week from $30 billion in early February, coinciding with a downtrend in decentralized application (DApp) revenues. This decline in onchain activity raises concerns about the sustainability of Solana's price increase.
Competition and Risks
Solana faces increased competition in tokenized stock trading from Hyperliquid and centralized exchanges on competing blockchains. OKX, for instance, formed a strategic partnership with the NYSE parent company using Ethereum-based systems. This competition could limit Solana's short-term upside and poses a risk to its ecosystem.
The timing of airdrops on the network remains uncertain, which could also impact Solana's price. Highlights include OnRe reinsurance with $200 million in TVL, Bulk perpetual DEX with an aggregate open interest of $325 million, and Loopscale lending platform at $79 million in TVL. However, it might be premature to claim that SOL is bound to reclaim the $80 mark, last seen on June 1, given the increased competition and weakening onchain momentum.
Key points
- Solana's SOL token jumped to $72 driven by tokenized stock trading growth
- Onchain data shows weakening momentum due to declining TVL and DEX volumes
- Competition from Hyperliquid and centralized exchanges poses a risk to Solana's ecosystem
If Solana's tokenized stock trading continues to grow and its onchain activity increases, its price could potentially reach $80 again. The launch of new tokens and airdrops on the network could also drive up demand and support its growth.
Solana's price could drop if its onchain activity continues to decline and competition from other blockchains increases. The dependence on Pump.fun and the relatively thin liquidity in automated market-making pools also pose risks to its ecosystem.
