Solana Builds Momentum Despite Recent Price Dip
Key Takeaways
- Solana (SOL) is on the verge of a potential breakout above the $180 mark.
- A sharp increase in realized profits suggests sales by experienced investors.
- A long squeeze worth $7.86 million has cleared out overleveraged positions.
- On-chain data indicates growing fundamental momentum despite the price decline.
- A drop in the NVT ratio and rising TVL point to a possible undervaluation.
Strong Moves Despite Price Decline
On May 11, the price of Solana (SOL) fell by 2.64% below the $180 mark. This drop was more than just a normal correction. Realized profits surged by over 347% at the same time. This indicates that seasoned investors were taking profits. As a result, a long squeeze worth $7.86 million forced many leveraged positions out of the market.
This injection of liquidity could now lay the groundwork for a new upward trend. If the bulls trigger a supply squeeze, short positions may come under pressure. This would generate additional buying momentum.
On-Chain Data Suggests Undervaluation
A look at the fundamentals paints a different picture than the price chart. The NVT ratio (Network Value to Transactions) has dropped to a two-week low. This ratio measures the market capitalization relative to transaction volume. A lower value indicates high blockchain usage – a sign of increasing activity.
The Total Value Locked (TVL), which represents the total value of assets held in Solana protocols, has also risen by nearly $3 billion in May. With over $22 billion, the TVL is back at mid-February levels. At that time, however, the SOL price was around 41% higher. This discrepancy suggests a potential undervaluation.
Capital Rotation from Stablecoins into SOL
Since Solana’s recent 25% price increase, the stablecoin volume on the blockchain has dropped significantly – from $13.09 billion to $11.71 billion. This is the largest decline in three months. This trend indicates that capital is moving from safe stablecoins into riskier assets like SOL.
At the same time, the number of wallets holding more than 1,000 SOL has increased – from 22,406 to 23,009. This suggests that mid-tier investors (so-called mid-tier whales) are expanding their positions. Open interest – the total volume of open derivatives positions – has also risen from $5.45 billion to $6.60 billion. This signals growing market participation and confidence.
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Technical Setup for the Next Surge
The conditions for a strong price move are in place: liquidity is available, market participants’ confidence is growing, and the fundamentals support a revaluation. If the price breaks sustainably above the $180 mark, it could trigger a chain reaction – including short liquidations and FOMO-driven buying (FOMO = Fear of Missing Out).
Our Assessment
Solana currently shows an interesting interplay of technical consolidation and fundamental strength. The increasing activity on the blockchain, the rising TVL, and the declining NVT ratio all point to healthy network development. At the same time, capital flowing out of stablecoins indicates growing investor risk appetite.
If you’re invested in Solana or considering entering, it’s worth keeping a close eye on the $180 level. A sustained breakout above it could pave the way for new all-time highs. The coming days are likely to be decisive.
Sources
- Glassnode
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