Solana price at risk as key network metrics drops, ETF inflows slow

Solana price has moved sideways in the past few months as activity in the network slowed and the crypto winter continued. SOL token has remained inside the narrow range between $75 and $93 since the first week of February this year. It is stuck in a deep bear market after falling from last year's high of $300.

Solana ETT experience modest inflows 

American investors are continuing their Solana ETF accumulation this month. Data compiled by SoSoValue shows that these funds are in their seventh consecutive month in the green, with the cumulative total inflows rising to nearly $1 billion. 

Solana ETFs have added $17.9 million in assets this month, its lowest level since their inception. They may, however, cross last month’s $45 million if the inflows trajectory continues.

Bitwise, a top crypto asset manager, is the biggest Solana ETF with over $634 million in assets under management (AUM). It is followed by other funds by companies like Grayscale, Fidelity, and VanEck.

In addition to the weaker ETF inflows trajectory, data shows that Solana's futures open interest has remained under pressure in the past few months. It stood at $5.46 billion, down sharply from last year's high of $16 billion.

Futures open interest is a metric that looks at the outstanding call and put options. A higher number is usually highly bullish as it shows that there is robust liquidity in the market.

Solana, like other cryptocurrencies, has experienced weak activity in the perpetual futures market after the large crash that triggered $20 billion in liquidations on October 10 last year.

Solana ecosystem growth has stalled

More data shows that Solana's ecosystem growth has come under pressure in the past few months. For example, while the amount of stablecoins in the network has jumped to $16 billion and the number of addresses moved to 5.3 million, the volume and number of transactions have dropped slightly. 

Solana processed stablecoins worth over $556 billion in the last 30 days as the number of stablecoin transactions fell to 279 million.

More data compiled by Nansen shows that Solana’s total transaction and fees collected have pulled back in the last 30 days. Solana handled over 2.3 billion transactions, down by 10%, while the number of active addresses fell by 12% to 94 million. The network fees dropped by 22% to $15.9 million.

This performance is mostly because of the ongoing crypto winter and the strong growth of Hyperliquid, which has taken some market share from Solana's dApps. Hyperliquid is now handling more transactions than all Solana platforms combined.

Solana price prediction: Technical analysis

SOL price chart | Source: TradingView 

The daily timeframe chart shows that the SOL price has remained in a narrow range in the past two months. It has been confined between the support and resistance levels at $75 and $93. 

This consolidation has led to a big drop in the Average True Range (ATR) and the narrowing of the spread between the three lines of the Bollinger Bands.

Meanwhile, the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have continued rising, a sign of a bullish divergence pattern.

Therefore, it is a tough call to make right now as this channel may be part of a bearish flag pattern, which often leads to a strong bearish breakdown. On the other hand, the ETF inflows mean that an accumulation is continuing, which may lead to a strong rebound.

As such, the next price action will depend on whether the coin rises above the upper side or drops below the lower side. A bearish breakout may see if drop to $50, while a rebound may take it to $100 and above.