Solana (SOL) has been facing mounting pressure in recent weeks, as its on-chain activity continues to decline, signaling potential trouble ahead for its price. The network’s daily active addresses have fallen to a three-month low, reaching 3.5 million. This sharp drop in activity raises concerns about the network’s future growth and investor sentiment.

Declining Active Addresses and Market Interest

Over the past month, Solana has witnessed a notable 35.5% decline in its price, moving from a local high of $195 to a recent low of $158. This downward trajectory is partly attributed to weakening on-chain activity, as evidenced by the decrease in daily active addresses. Active addresses are a critical metric for understanding a blockchain’s health, as they directly reflect the number of users interacting with the network.

Solana’s daily active addresses, which had previously remained steady, have now plunged to a low of 3.5 million. This decline points to a reduction in market interest and adoption of the Solana blockchain. In the cryptocurrency space, a reduction in active users often signals diminishing demand, which usually correlates with price depreciation. As more users disengage from the network, it becomes harder for the price to maintain upward momentum.

Decreasing DEX Volume and Trust Issues

The decline in Solana’s active addresses is mirrored by a drop in decentralized exchange (DEX) trading volume. Recent data from Artemis revealed that DEX volume on Solana has fallen to a four-month low of $1.5 billion. Such a sharp drop suggests that users are pulling away from Solana’s decentralized ecosystem, possibly due to a lack of confidence or concerns about the network’s security.

Another worrying trend is the decline in Solana’s stablecoin transfer volume. From a peak of $394 billion just a month ago, the stablecoin transfer volume has dropped to just $7.1 billion. This steep drop-off is a clear indication that large investors are shifting their focus away from Solana, with many seeking more established platforms like Ethereum (ETH). This shift could be a response to concerns over network security, as well as Solana’s increasing vulnerability to broader market trends.

SOL’s Price Action and Future Outlook

As expected, these developments have translated into downward pressure on Solana’s price. At the time of writing, SOL was trading at a three-month low of $158, reflecting a 7.09% decline over the past 24 hours. In the past month, the cryptocurrency has shed 35.52% of its value, leading some to speculate that further losses may be on the horizon.

With low demand and reduced on-chain activity, it is possible that SOL could experience further price drops. If the current trend persists, analysts predict that SOL could dip to as low as $154 in the coming days. However, if the broader market sentiment shifts and buyers begin to enter the market at these lower levels, there could be a potential for a rebound. In that case, SOL might recover to around $175.

Conclusion

Solana is facing a challenging period, with its on-chain activity and investor sentiment showing signs of strain. The drop in daily active addresses, declining DEX volumes, and shrinking stablecoin transfers indicate a weakening network. Unless Solana can address these issues and reignite investor confidence, its price may continue to struggle. Traders and investors will be closely monitoring these developments, as the price of SOL could fluctuate further in response to market trends and network performance.