Solana （SOL） has seen a significant price rally, reaching $193. This article examines whether this marks a local top for SOL and explores the factors influencing its price.
Points
- Solana （SOL） price gained 23.5% in July, reaching $193.
- Memecoins and incentivized-liquidity platforms have driven network volume and revenue gains.
- Solana’s Total Value Locked （TVL） remains stagnant, posing a risk.
- Excessive power in validators’ hands is a concern for network decentralization.
- Analysts debate whether SOL’s price can sustain its upward trajectory.
Despite this short-term setback, SOL price gained 23.5% in July, though some traders fear that the downtrend may have only just begun. Solana （SOL） has experienced significant price movement, reaching $193. This rally raises questions about whether this marks a local top for SOL or if further gains are possible.
Solana （SOL） vs. ETH, BNB, AVAX, ADA. Source: TradingView
Are Memecoin Rallies a Sustainable Path for Solana’s Network Growth?
Memecoins, particularly those using incentivized-liquidity and trading platforms like Pump.fun, have driven Solana network’s volumes and revenue gains. The platform promises an easy and instant way to launch tradable tokens using a “fair-launch” methodology with no presale or team allocation, automated market making, and incentivized burn mechanisms.
However, while memecoin rallies have contributed to short-term gains, they may not provide a sustainable path for long-term growth. Flip Research’s article asserts that Solana decentralized applications metrics “are significantly overstated” because the “vast majority of tokens traded are ultra-high volatility, low liquidity memecoins,” creating a “juicy attack surface for MEVs to extract value.” The article concludes that the “vast majority of organic users are losing money on-chain to bad actors at a rapid pace,” which seems unsustainable.
Solana Stagnant TVL and Excessive Power on Validators’ Hands Pose a Risk
Solana network TVL, SOL. Source: DefiLlama
https://x.com/Flip_Research/status/1818216739680710776
Reading the Solana Chart
Solana price has been in a wedge for nearly 152 days. The price had attempted four times to move past the channel’s upper boundary and the resistance zone of $193-$200. However, it failed and dropped to the lower border of the channel, at the $150-$140 support zone.
Recently, a bullish spell was induced in resonance with the broader market, and from July 5th onwards, SOL advanced once again toward the channel’s upper border. Indicators-wise, the EMA bands support the price, MACD was at 0.2528, and the RSI was at 60.11.
Therefore, if the momentum continues, the price could advance higher, while hurdles could be present at $210 and $225, respectively. However, the slippage of gains would change the tides, and the price could drive towards supports at $150 and $140, respectively.
Analysis
- Market Volatility: The significant price movements in SOL reflect the high volatility and speculative nature of the cryptocurrency market.
- Network Health: Stagnant TVL and concentrated validator power pose risks to Solana’s long-term sustainability and decentralization.
- Technical Indicators: Current technical analysis suggests potential price growth, but traders should be cautious of the identified support and resistance levels.