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While validators were required to update to the new network, Solana’s revenue fell.
Several indicators predicted that SOL could drop as low as $155.
As a crypto investor with some experience in the market, I’m keeping a close eye on Solana (SOL) after the recent network upgrades required validators to update. While I understand that the upgrade is necessary to address congestion issues, it has temporarily impacted the revenue of the network.
Solana (SOL) is encouraging validators on its network to update to Testnet version 1.18.15. As announced by Solana Status, this upgrade aims to alleviate congestion on the network.
Around four weeks ago, there was a four-hour interruption in the functioning of the blockchain due to the surge in demand for SOL.
Developers on the network took actions to revive the network, resulting in better performance and increased availability.
Although Solana hasn’t been operating at full capacity, version 1.18.15 is anticipated to address this issue.
SOL is not following this time
Previously, following the resolution of traffic jams in the SOL project, its price has typically risen within a few days. Currently, the value of SOL is at $159.33, marking a 4% decrease from the previous day’s price.
An analysis conducted by AMBCrypto revealed a decrease in Solana’s network activity based on data from Artemis. The number of daily active addresses dropped to approximately 1.4 million.
Sixth of June update: The number stood at 1.9 million, suggesting approximately half a million market players have ceased engaging with the network.
If the number of active addresses on the Solana network keeps declining, it’s possible that the price of SOL may not recover. But if network usage picks up, the SOL token could potentially surge towards $165 in value.
OI and volume say “no” to recovery
Additionally, the decrease in engagement has negatively impacted both revenue and fees for Solana. At this moment in time, its earnings were significantly less than what they had been on the 5th of June.
In addition to examining Solana’s price action, AMBCrypto noted its trading volume as well. Specifically, according to data from Santiment, this amounted to approximately $1.51 billion at the point of reporting.
The volume dropped significantly from the $3 billion mark reached on the 7th of June. The volume level is an essential indicator, reflecting investor activity and potentially influencing the price trend of a token.
However, one thing we noticed was that the volume had begun to increase.
If the volume is rising as the price is declining for SOL, this implies that there are more sellers than buyers in the market. This imbalance could intensify the downward trend, potentially leading to a deeper price decrease for SOL.
If this situation arises, the price of SOL might drop down to $155. Moreover, the Open Interest served as another indication favoring a price decrease.
Open Interest (OI) indicators signify the number of open contracts in a financial market. An uptick in Open Interest implies an augmentation in the assigned liquidity for market positions.
Instead of “However, a decline suggests that traders are closing their positions, leading to a drop in money flow,” you could say “A decline implies that traders are liquidating their holdings, resulting in less capital flowing into the market. Currently, Open Interest for Solana stands at approximately $2.19 billion as reported by Coinglass.”
The reduction in Open Interest (OI) indicated that traders had reduced their net positions. Consequently, it’s uncertain if Solana (SOL) will undergo significant price surges.
As a crypto investor, I can tell you that there’s a possibility the token’s value may start to trend upward in the near future. It’s important to note, though, that this is not a certainty. Furthermore, some significant changes have been made within the Solana ecosystem: The Solana Foundation announced the removal of certain validators from its delegation program.
The Foundations explain that it was essential to make this decision due to validators carrying out “sandwich attacks” against their users. In simpler terms, these incidents involved validators exploiting the system in a harmful way towards other users.
For context, a sandwich attack is an exploit where an attacker puts two transactions around a victims’ transaction to manipulate the price action, and profit from the difference.
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2024-06-10 17:11