Solana’s Active Wallet Growth Suggests Increased User Engagement Amid Price Corrections and Declining TVL

• Active wallet addresses on Solana are experiencing remarkable growth, signaling increased user engagement within the ecosystem.

• Despite this uptick in network activity, the Total Value Locked (TVL) in Solana’s DeFi sector has experienced a significant decline, highlighting a complex market landscape.

• According to recent analysis from COINOTAG, “The rise in active addresses underscores a potential disconnection between user activity and market valuation.”

Solana’s user adoption is soaring while its Total Value Locked declines, indicating a puzzling discrepancy in market dynamics amidst robust network activity.

Solana’s user adoption soars amid price correction

Data from Glassnode indicated that the number of addresses with 0.1 SOL or more rose from around 9.2 million in late December to over 11 million by March 21. This surge suggests an increasing level of engagement from users despite a price drop.

Source: Glassnode

This growth in the user base indicates sustained interest in the Solana ecosystem, even as the asset’s price has declined from a high of $180 in January to approximately $129.54 at the time of writing. This divergence suggests that retail investors may be accumulating SOL in anticipation of future gains.

Solana’s TVL faces pressure, but holds key levels

Conversely, the Total Value Locked (TVL) on Solana has registered a notable decline. According to DeFiLlama, the TVL plummeted from a peak above $11 billion in January to approximately $6.4 billion recently, reflecting a contraction in DeFi activity catalyzed by macroeconomic volatility.

Source: DeFiLlama

It is noteworthy that the current TVL level remains significantly higher than the pre-bull market baseline of 2023, suggesting that Solana’s DeFi ecosystem continues to hold traction despite challenges.

Solana’s price outlook – Rangebound, but supported by accumulation

At the time of this report, SOL was trading below the 50-day moving average ($135.50) and the 200-day moving average ($188.05), indicating a broader bearish trend. However, the Accumulation/Distribution Line reflects consistent upward movement, suggesting that institutional and smart money investors may be taking positions at the current price levels.

Source: TradingView

With relatively low trade volume and resistance situated around the $135 mark, price action may remain rangebound in the immediate future. Nevertheless, ongoing on-chain growth could serve as a catalyst for potential upward movements.

Solana has been demonstrating robust underlying demand, even as speculative trading declines. If price eventually aligns with the strengthening network dynamics, SOL could be positioned for further price gains ahead.

Conclusion

In summary, while Solana’s network activity and user adoption are on the rise, the concurrent decrease in TVL suggests a nuanced market scenario. As smart money accumulates, the potential for price recovery remains plausible, provided that vital network fundamentals persist.