Solana price came under intense pressure on Friday as it continued its recent downtrend. SOL fell for the third consecutive day, reaching a low of $136, down by nearly 25% from its highest point in May this year. This article explores what to expect as Solana’s stablecoin ecosystem sends mixed signals.
Solana stablecoin supply and addresses falling
Stablecoins have become the fastest area in the financial market as demand has surged following the recent Circle IPO. Circle, the creator of USD Coin, has become a company valued at over $50 billion as the stablecoin hype continues.
Data shows that Solana’s stablecoin ecosystem is sending mixed signals. First, the stablecoin has supply on Solana has been in a downtrend in the past few months. The supply peaked at $12 billion in April and then dropped to $11 billion this month.
It then fell to $10 billion this month, and the downtrend may continue. USD Coin (USDC) is the biggest stablecoin in Solana, followed by Tether and PayPal USD (PYUSD).
Another metric shows that the number of stablecoin addresses continued their downtrend this month. It had over 3.1 million addresses, a decrease of 6.3% from the previous month.
On the positive side, the number of stablecoin transactions on Solana rose by 2.2% this month to $178.8 million, while the adjusted transaction volume rose by 42% to $92.4 billion.
Solana DeFi TVL and DEX volume have fallen
The stablecoin deterioration in Solana happened as other parts in the ecosystem weakened. For example, data shows that the total value locked (TVL) on the Solana network dropped by 15% over the last 30 days to exceed $18 billion.
In contrast, Ethereum’s TVL fell by just 3.28%, while Bitcoin and BNB Chain fell by 6.27% and 12%, respectively.
Further data shows that BSC and Ethereum have also overtaken Solana in the decentralized exchange industry. The volume processed by the chain dropped to $1.6 billion in the last 24 hours, lower than BSC’s $5.95 billion and Ethereum’s $2.17 billion.
This performance is mostly because most Solana meme coins have crashed in the past few days, with their market capitalization falling to $9.2 billion from last month’s high of over $15 billion.
Solana price technical analysis
The daily chart indicates that the SOL price formed a double top pattern at $186.80 in May, which explains its recent decline. It moved below this pattern’s neckline at $160.
Solana price has crashed below the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bears are in control for now. It is also hovering slightly above the 23.6% retracement level, while the MACD and the Relative Strength Index (RSI) have continued falling in the past few months.
Therefore, Solana price will likely continue falling as sellers target the key support level at $120. A drop below $120 will raise the possibility of SOL falling to $100. The bearish Solana forecast will become invalid if the price rises above the 38.2% retracement point at $162.
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