Sonic (S) has captured investor attention with a sharp 24% rally over the past month, including a 1.20% gain in the last 24 hours. The price surge has been supported by strong on-chain performance, rising user activity, and deepening liquidity across decentralized platforms. However, a closer look at market behavior reveals a striking divergence between retail enthusiasm and caution from institutional traders, prompting questions about the sustainability of this rally.

A growing number of market participants are engaging with the Sonic blockchain, and recent metrics point to increasing adoption. According to blockchain analytics firm Nansen, the number of active addresses on the network doubled last week, climbing past 45,000. This surge in participation suggests rising user interest and a broader base of holders, which typically supports upward price momentum. Given the timing of this activity during a price upswing, it’s likely that a significant portion of these addresses are associated with buyers entering or accumulating positions.

Sonic’s performance on decentralized exchanges (DEXs) reinforces this view. Weekly trading volume on DEXs jumped by 26%, reaching $788 million. This impressive growth puts Sonic ahead of several other prominent blockchain networks, including Avalanche (AVAX), Aptos (APT), Polygon (MATIC), Tron (TRX), and Hyperliquid (HYPE). Elevated DEX activity not only demonstrates rising demand but also enhances token utility, which in turn can drive long-term value.

Liquidity inflows into the Sonic network have also increased notably. Data from Artemis shows that Sonic recorded the highest Bridged Netflow among all tracked chains, with $37.1 million in capital entering the ecosystem. Inflows of this size typically signal confidence in the project and often precede further price expansion, as they suggest that investors are positioning themselves early for potential gains.

Despite these bullish fundamentals, sentiment among experienced traders tells a different story. Data from CoinGlass reveals that top traders on Binance are heavily leaning toward short positions. The Long-to-Short Ratio for Binance’s top accounts is currently at 0.7435, indicating that selling sentiment outweighs buying interest among elite traders. This ratio is a key indicator of market positioning, and values below 1 often reflect caution or expectations of a pullback.

This skepticism is further supported by derivatives market metrics. The Open Interest Weighted Funding Rate—a metric that combines funding rates with the size of open positions—currently stands at -0.0008%. While the figure is not dramatically negative, it does imply a slight bearish bias. When funding rates dip below zero, it typically indicates that short positions are more prevalent, suggesting that traders are willing to pay to maintain bearish bets.

The divergence between bullish on-chain data and bearish derivatives sentiment creates a unique setup for Sonic. On one hand, growing address activity, record DEX volumes, and major liquidity inflows all point toward strong underlying demand and broader network adoption. On the other hand, some of the most experienced traders in the market are positioning for a correction, likely in anticipation of profit-taking or broader market volatility.

This split raises important considerations for investors. If the bullish fundamentals continue—particularly the rise in network activity and capital inflow—the rally could extend and even accelerate. On-chain trends suggest that new users and capital are flowing into the ecosystem, often a leading indicator of price strength. However, if the caution expressed in derivatives markets proves accurate, Sonic could face a short-term correction before regaining its upward trajectory.

For now, Sonic appears to be at a pivotal moment. The next few trading sessions may determine whether this asset breaks higher on the back of growing demand or retraces due to overextension and increased short selling pressure. Investors should monitor both on-chain trends and trader positioning to navigate what could be a volatile but potentially rewarding period ahead.