Solana
Solana DEX Volume Falls: Could SOL Be in Trouble?
- The significant drop suggests a cooling of interest in Solana-based memecoins.
- SOL price could test lower support levels around $145.90 if interest continues to decline.
The daily trading volume of decentralized exchanges on Solana [SOL] fell. As of May 26, AMBCrypto’s analysis of Artemis’ dashboard showed volume to be $984 million.
Three days before, this figure exceeded $1.5 billion. This drop contrasts with the record recorded by the blockchain in April. At that time, Solana’s DEX volume reached an all-time high of $60 billion, summarized monthly.
Considering the recent fall and May is coming to an end, the total volume for the month may be lower. The previous surge could be linked to the memecoin frenzy on the network.
No memecoins, no party
Therefore, the drop could mean that interaction with memecoins launched on Solana was no longer as high as it used to be. On top of that, the development appears to put SOL, the ecosystem’s native token, on the back burner.
At press time, the price of SOL was $161.49. A few days ago, the value was near $190. If DEX volume continues to slideSOL could also follow.
Indeed, the demand for cryptocurrency is relatively linked to the trading of memecoins. For those unfamiliar, while some memecoins can allow trading with USDC, most require SOL.
Source: Artemis
So, if the purchase of memecoins decreases, offers for SOL would most likely decrease. Apart from this, other metrics can also predict Solana’s next price direction, and AMBCrypto has looked into them.
SOL has become weak
Another metric we analyzed was Solana’s Open Interest (OI). According to Santiment data, OI had fallen to $1.90 billion. As of May 20, this value stood at nearly $2.20 billion.
OI is the value of all open positions in a contract. If it increases, it means that net positions are increasing and more money is entering the market. In this case, the increase serves as a bullish signal.
A good example was shown in the chart below when the price of SOL surged to $188.45 while OI surged. However, this decrease meant that cash withdrawn SOL contracts have increased.
Source: Santiment
Thus, the strength of a possible uptrend was decreasing. If this persists, SOL price could continue to fall and a move to $145.90 could be possible.
Additionally, AMBCrypto reported that Solana began to lag behind other blockchains in terms of activity. Some of the projects that gave Solana a hard time were Aptos [APT] And Sui [SUI].
Realistic or not, here it is APT market capitalization in terms of SOL
However, it remains unclear whether these projects will be able to stand the test of time by consistently outperforming Solana transactions.
If this happens, Solana could lose some of its market value as well as its price. Otherwise, it could amount to winner manners.