Solana News Today: Solana's Price Rises Amid 50% Transaction Drop-Bubble or Efficiency?

Solana's daily transaction volume has plummeted by 50% since its July peak, despite a 24% price rally for its native token, SOL, over the past 60 days, raising concerns about the sustainability of the current market dynamics. On-chain data from CryptoQuant reveals that transactions on the Solana blockchain dropped from approximately 125 million on July 24 to 64 million by early October. This divergence between falling network activity and rising prices has sparked debates about whether the recent SOL surge is driven by speculative momentum rather than organic demand.

The decline in transactions is partly attributed to the structure of Solana's consensus mechanism, which relies heavily on "voting" transactions to maintain network security. These transactions, which account for 80–90% of the total volume, are tied to validator operations and do not reflect user activity. If the drop is primarily in voting transactions, it could indicate improved network efficiency rather than reduced engagement. However, a decline in non-vote transactions-such as DeFi trades, NFT mints, or fund transfers-would signal waning user interest. Analysts have noted that distinguishing between these transaction types is critical to assessing the health of the ecosystem.

Market participants are closely watching the implications of this negative divergence. Typically, a healthy price rally is supported by growing network usage, reflecting genuine demand. The current scenario, where prices rise amid falling transaction counts, suggests potential speculative activity driving the SOL surge. This has led some analysts to caution about a possible "bubble" in the short term, particularly if the rally lacks fundamental support.

The broader context includes regulatory developments, as the U.S. Securities and Exchange Commission (SEC) is reviewing multiple spot Solana ETF applications from major issuers, including VanEck, Fidelity, and Grayscale. With approval odds now exceeding 99% on Polymarket, the outcome could catalyze institutional demand, mirroring the impact seen with Bitcoin and Ethereum ETFs. However, the recent transaction slump has prompted questions about whether such approvals would translate into sustained price momentum or exacerbate volatility.

Solana's founder, Anatoly Yakovenko, has defended the network's appeal to developers, citing its robust infrastructure and resources for product development. Despite the transaction drop, he emphasized that key teams in the ecosystem, such as Mad Labs and Jupiter, remain committed to Solana, viewing it as the "least worst" option compared to other blockchains. This developer loyalty could underpin long-term growth, even if short-term on-chain metrics appear mixed.

Technical analysts have identified potential price targets for SOL, with some pointing to a $425 level based on a cup-and-handle pattern and Fibonacci extensions. A golden cross in the MACD indicator on monthly charts has also been cited as a bullish signal. However, these projections rely on the assumption that network fundamentals align with price movements-a scenario that remains uncertain given the recent transaction decline.

In conclusion, Solana's market performance highlights the complex interplay between speculative trading, regulatory developments, and network fundamentals. While the price rally has attracted attention, the sharp drop in transactions underscores the need for caution. Investors are advised to monitor both on-chain activity and regulatory outcomes to gauge the sustainability of the current trend.

Source: [1] Solana's 50% drop in transactions raises bubble fears (https://www.cryptopolitan.com/solana-transaction-drop-raises-bubble-fears/)

[2] Solana News: SOL Records Unusual 50% Slump in Transactions ... (https://themarketperiodical.com/2025/10/09/solana-news-sol-records-unusual-50-slump-in-transactions-price-reacts/)