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Investor Caution

Solana’s Rally to $200 Slows Despite the Increasing Number of Transactions and Active Addresses

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  • Despite seeing more transaction activity and wallets, Solana’s trading volume fell by 14.84% last month.
  • While Solana has sound events happening on-chain, its performance in the market continues to weaken.
  • Because SOL’s price is not rising, many investors are flocking to Ethereum and Polygon.

Even though Solana (SOL) has seen higher levels of user activity and transactions recently, the token’s rise to $200 is slowing down. Even though Solana’s network has seen active users increase over the past six months, the SOL token hasn’t maintained an upward trend. 

Despite Solana’s Performance, Investors are Starting to Trade with Less Optimism

The weekly trading activity on this network decreased by 14.84% which was much lower than what several competing blockchains experienced.

Source: DeFiLlama

Solana, according to data, handled over $2.144 billion in trading activity within the last 24 hours and $22.77 billion over the previous week. It also holds almost 12.71% of the DEX volume, but the fall in activity suggests trader and investor caution, particularly with the shift in the broader crypto market mood.

On-Chain Metrics Don’t Always Match How Markets React

Surprisingly, the core structure of Solana’s network is holding up well. With $9.205 billion currently locked into DeFi, it seems that liquidity providers and DeFi users are still interested. 

Furthermore, transactions over the network have totaled 3 billion in the last 30 days, proving that activity hasn’t stopped on the blockchain.

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Source: Nansen

At the same time, on-chain data demonstrates that this network has handled a large number of transactions daily, each in the 50–70 million range in recent times and the rise in May was significant. The number of failed transactions has not seen much change, suggesting the network does a pretty good job.

Besides, the number of daily active addresses—an indicator of real engagement—recovered from its dip in April and is now regularly above five million. Experts often see this increase in active wallets as an indicator of increased user participation.

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Source: Nansen

Market Is Still Watching for Signs of Solana’s Recovery

Despite increasing use, Solana isn’t performing well because other aspects aside from its technology, like speculation, macroeconomic issues and how investors perceive short-term success, seem to affect it. Other networks such as Ethereum and Polygon, have posted stronger growth over the past week. 

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Binance Data: Investors Delaying Major Shifts between Stablecoin and Other Cryptocurrencies

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  • Binance stablecoin reserves have remained stagnant for the past year, suggesting investors are holding back from making big financial moves.
  • Recent Bitcoin price gains are yet to convince investors to pull their stablecoins and invest in other cryptocurrencies.
  • Investors are keeping a cautious stance until they receive more signals about the state of the economy.

A look at Binance’s stablecoin reserves shows that they’ve stayed within a narrow band over the past year, oscillating between $30 and $34 billion. The lack of growth in stablecoin reserves suggests that investors are reluctant to trade their stablecoins for other, riskier assets, such as Bitcoin and Ethereum.

Numbers in Binance Highlight a Steady Level of Stablecoin Reserves Since 2022

Also known as “fiat-backed currencies,” stablecoins are designed to retain their value by being linked to currencies like the U.S. dollar. They can be held by investors as a temporarily safe asset while they deliberate their next step in the market. 

A chart provided by Ali illustrates just how much investors are holding back their crypto activity right now. The chart reveals a comparison between two main lines, representing Bitcoin price and the amount of stablecoins held on Binance. 

Source: X @ali_charts

Binance’s Bitcoin price is shown on the black line, while the light grey line indicates the amount of ERC20 stablecoins stored on the exchange. Stablecoin reserves demonstrate a pattern of increasing and then leveling off from mid-2022 through to the present day. 

On the other hand, the black line indicates an uptrend in BTC prices even as investors remain hesitant and withhold large amounts of money from the market.

Stablecoin Reserve Levels Indicate the Length of Market Hesitation

At the moment the chart was published, Bitcoin prices stood at $103,599.71, with a 0.16% decline in the 24 hours time frame. As for stablecoin reserves, they stood at around $30.6 billion, having witnessed a slight dip of more than $227 million.

The slight fluctuation in the reserves indicates there have been few wholesale investor transactions in the market recently. Such few changes to the reserves suggest a combination of positive sentiment and continued market uneasiness.

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