Bad crypto news: the number of users using Solana (SOL) has fallen to its lowest level in more than two years.
Indeed, as of 31 August, Solana’s daily active addresses had shrunk to around 204,000, marking the lowest figure since The Block began tracking this data in late 2020. See below for full details.
Summary
Negative crypto record for Solana’s (SOL) daily active addresses in 2023
As anticipated, the Solana layer 1 blockchain is continuing to see a loss of momentum, with the number of daily active addresses recently reaching its lowest point since The Block began tracking this data in late 2020.
In fact, according to The Block‘s Data Dashboard, the daily active address count on Solana, using a seven-day moving average, has declined dramatically, standing at about 204,000 as of 31 August.
Using the 7DMA metric, which represents the average value of a data point over the past week, is useful for identifying and analyzing trends.
Solana in decline: the impacts of FTX’s collapse and identification as a security by the SEC
We emphasize that this decline in the number of active users on Solana was accentuated after the FTX cryptocurrency exchange crash last November and following the Securities and Exchange Commission’s declaration regarding Solana’s native SOL token as a security.
Rebecca Stevens, data analyst at The Block Research, in fact stated the following on the matter:
“The Solana ecosystem was already showing active user demand before the FTX incident, but the strong connection between the blockchain and the exchange, along with Alameda Research (the trading firm linked to FTX), has significantly affected its reputation .
Additionally, the SEC’s identification of SOL as a stock negatively impacted the token’s value, leading to its removal from several trading platforms in the United States, including eToro and Robinhood.”
According to CoinGecko data, SOL’s current price stands at about $20, showing a 7% drop in the previous seven days.
Solana currently occupies the tenth position by total value locked, with a total of about $311 million, according to data from DefiLlama.
Brief focus on the price of the Solana (SOL) crypto
As anticipated, Solana (SOL) has recently experienced significant deterioration in several critical metrics, marking the first time that such negative trends have manifested in months.
An even closer analysis of Solana actually revealed a weekend performance that was far from ideal.
In fact, on 10 September, SOL dropped significantly, closing the trading day at $18.24, showing a drop of 6.17%.
This particularly sharp drop exceeded 6%, an event that had not occurred in over two months. The last similar episode was in June, when SOL recorded a decline of more than 10%.
At the time of writing, SOL was trading at about $18.3, showing a modest price increase of 0.7%.
However, this rise did not significantly affect the predominant bearish trend, as evidenced by the relative strength index (RSI) and moving average convergence and divergence (MACD).
The RSI was below 30, approaching the oversold zone, while the MACD was in negative territory. In addition, SOL met resistance from its long- and short-term moving averages, located at about $21 and $22, respectively.
Impacts of the funding rate and the upcoming legal decision
Moreover, Solana’s weekend performance not only impacted its market value, but also greatly affected the funding rate associated with the cryptocurrency.
In fact, according to data provided by Coinglass, on 10 September, SOL posted its highest negative funding rate in more than two months, standing at -0.04%.
The last time such a negative funding rate was observed was in June, when the price of SOL fell more than 10%.
The negative financing rate also indicates that traders had anticipated a decline in SOL prices.
We emphasize that the main cause of Solana’s decline and traders’ bearish positions can be traced to an impending lawsuit involving FTX.
According to reports, a crucial decision is expected on 13 September regarding FTX’s request to convert its assets into cryptocurrency to cover outstanding debts. These reports suggest that approximately $650 million in SOL could be settled if the ruling favors the exchange in question.
As a result, this forthcoming legal decision has triggered a range of speculation about SOL’s future prospects, significantly affecting its price movements.
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