Contrasting its record volume in April, the downturn as May ends suggests a potential change for SOL.
- The significant decline hinted at a cooling interest in Solana-based memecoins. SOL’s price might test the lower support levels around $145.90 if interest continues to decline.
The daily trading volume of decentralized exchanges on Solana [SOL] has fallen. As of the 26th of May, AMBCrypto’s analysis of Artemis’ dashboard showed that the volume was $984 million.
Three days before that, the figure was over $1.5 billion. This decline was in contrast to the blockchain’s record in April. At that time, Solana’s DEX volume hit a record high of $60 billion, summed up every month.
Considering the recent fall and May nearing its end, it is possible that the total volume for the month could be less. The previous surge could be linked to the memecoin frenzy on the network.
No memecoins, no party
Therefore, the decline could mean that interaction with memecoins launched on Solana was no longer as high as it was. Besides that, the development seemed to put SOL, the native token of the ecosystem on the backfoot.
At press time, SOL’s price was $161.49. A few days back, the value got close to $190. Should the DEX volume continue to slide, SOL might also follow.
This is because demand for the cryptocurrency is relatively tied to memecoin trading. For those unfamiliar, while some memecoin might allow exchange with USDC, most need SOL.
Source: Artemis
As such, if the purchase of memecoins decreases, bids for SOL would most likely drop. Apart from this, other metrics can also predict the next direction for Solana’s price, and AMBCrypto looked at them.
SOL has become weak
One other indicator we analyzed was Solana’s Open Interest (OI). According to data from Santiment, the OI was down to $1.90 billion. As of the 20th of May, this value was almost $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 coming into the market. In this instance, the increase serves as a bullish signal.
A good example was shown in the chart below as SOL’s price rallied to $188.45 as the OI jumped. However, this decrease meant that liquidity taken out of SOL contracts increased.
Source: Santiment
Thus, the strength for a possible uptrend was waning. If this persists, SOL’s price might continue to decrease, and a move to $145.90 could be possible.
In addition, AMBCrypto reported that Solana has started lagging behind other blockchains in terms of activity. Some of the projects giving Solana a run for its money were Aptos [APT] and Sui [SUI].
Realistic or not, here’s APT’s market cap in SOL terms
However, it remains uncertain if these projects would be able to stand the test of time by outpacing Solana transactions consistently.
If this happens, Solana might shed a part of its market value as well as its price. If not, it could get back to winning ways.
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