Solana has shown impressive performance in the cryptocurrency market over the past three months, with its price seeing a sharp growth from around $160 to $230. However, recent on-chain data shows a less optimistic picture beneath the surface.
Solana network activity is declining
In a Quicktake post on the CryptoQuant platform, the analyst with the pseudonym CryptoOnchain open That there was an increasingly negative discrepancy between Solana’s price and the number of active addresses working with its network.
The online critic’s report was based on the Solana Daily Active Addresses Vs Sol Price scale. This metric tracks the relationship between Solana’s market price and the number of unique addresses actively interacting with its network over the past 90 days.
CryptoOnchain noted that when Solana began its rally around July from around $160 to $230, its network activity saw a stark reversal.
Source: CryptoQuant
In the chart shared by the on-chain analyst, we see a significant decline in the 7-day moving average (MA) of active addresses. Since the beginning of Q3, the 7-day moving average has dropped from 3.4 million to nearly 2.2 million addresses to end the period.
To add an important caveat, the cryptocurrency analyst stated that the evaluation was fueled by calculating active addresses using the “signature method.” This method is important because “unique addresses that signed and sent successful transactions (success=true) are included,” thus providing analysts with an accurate measure of which users are actively interacting with the network.
What’s next for Solana?
CryptoOnchain further explained that the increasing negative divergence currently occurring in the Solana market indicates something interesting within the blockchain.
As of recent, Solana’s price rise appears to be driven less by network adoption and user base activity, but rather by speculative activity, high-volume transactions conducted by whales, or other market factors.
Looking at the bigger picture, it is clear that the health of Solana – and any blockchain technology – depends on continuous network activity. A network of active participants will see a healthy demand for transactions, which may further contribute to the growth of the cryptocurrency in question.
Currently, SOL price still maintains a healthy bullish structure as it looks to resume its upward march. However, if user activity continues to weaken as price momentum continues, the market may struggle to keep up once all the speculation driving its current growth fades.
As of this writing, Solana is valued at around $186, reflecting a decline of more than 15% over the past 24 hours. This deep correction comes against the backdrop of US President Donald Trump’s announcement of imposing a 100% tariff on Chinese goods.
The price of SOL on the daily timeframe | Source: SOLUSDT chart on TradingView
Featured image from Getty, chart from TradingView
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