Solana – Here’s why SOL faced 10% weekly loss despite on-chain growth

Key Takeaways

Solana’s on-chain metrics are holding robust. However the worth motion isn’t following swimsuit. With SOL/ETH down 50% and sensible cash leaning into ETH, is SOL failing to draw actual shopping for stress?

Solana’s [SOL] on-chain fundamentals stay resilient. 

Its Whole Worth Locked (TVL) is up 2.67%, at press time, up to now 24 hours, user retention is steady, and protocol-level throughput continues to scale, evidenced by a 500% MoM enhance in stablecoin progress.

Structurally, the ecosystem seems intact. But the worth motion is diverging. SOL is down practically 10% on the week, underperforming its L1 friends, and main the highest 5 in weekly losses. 

Supply: TradingView (SOL/USDT)

The backdrop? Aggressive deleveraging. 

Over $4 billion in Open Curiosity has been flushed up to now two weeks. Apparently, Ethereum’s [ETH] has absorbed an excellent deeper $10 billion OI flush, compounded by persistent ETF outflows.

And but, Ethereum continues to outperform Solana on each absolute and relative phrases. So with SOL/ETH nonetheless trending decrease, is Solana vulnerable to continued draw back towards the remainder of the majors?

Solana lags in risk-off stream

Few knowledge factors seize Solana’s institutional momentum higher than DeFi Dev Corp. (NASDAQ: DFDV). 

In its July earnings release, the agency reported a pointy 91% MoM enhance in SOL publicity, now holding 1.18 million SOL, with the place now valued at $204 million (+112% MoM), bringing its whole provide to 124,315 SOL.

However regardless of the aggressive ramp, Solana closed the month up simply 11.57%, whereas Ethereum rallied 48.76%. What’s extra, the SOL/ETH ratio slid 25% in the identical window, marking its worst month-to-month print since 2022.

Supply: TradingView (SOL/ETH)

These institutional flows are deepening the SOL/ETH divergence. ETH’s stronger ROI continues to draw sensible cash, backed by a pointy rise in wallets holding over 10k ETH.

Solana, in the meantime, is seeing a decline on this cohort, additional weakening its relative power. Consequently, the SOL/ETH ratio was retesting a key yearly assist on the every day chart, on the time of writing.

Nonetheless, with capital rotation leaning closely towards ETH, a breakdown seems seemingly. And not using a clear risk-on set off, Solana lacks the momentum to reclaim the $200 psychological stage.