Solana Price Jumps, But Network Adoption Remains Weak

Solana (SOL) edged higher by 2% on Monday, adding to the nearly 3% rise from Sunday. A steady inflow into US spot Solana-focused Exchange Traded Funds (ETFs) reflects deeper institutional support for the blockchain.

The Solana network is exploring private transactions through a privacy-focused hackathon starting on Monday. This initiative could strengthen demand from retail and smart money investors.

The privacy hackathon offers $75,000 in rewards for private payments, a launchpad, and an open track for other privacy-focused protocols. Submissions will end on February 1, with winners announced on February 10.

Why Did This Happen?

Institutional demand for Solana has persisted through weekly inflows into Solana ETFs. Last week, these ETFs recorded $41.08 million in inflows, marking the eighth consecutive week of inflows. This suggests that demand for Solana remains strong among institutional players.

The Solana ETFs have now recorded $1.10 billion in total net assets, reflecting rising institutional demand. If inflows continue and intensify, the price of Solana could see a further rally.

How Did Markets React?

On-chain metrics and derivatives activity suggest a bullish outlook for Solana. Capital inflows into Solana futures have increased, with the Open Interest (OI) for Solana futures rising by 4.90% in the last 24 hours.

The 24-hour long-to-short ratio of 1.0235 indicates a greater number of active long positions. Short liquidations of $12.61 million outpace long liquidations of $2.14 million, indicating a larger wipeout of bearish-aligned positions.

Solana’s price has crossed above the Supertrend indicator line, triggering a fresh uptrend and flashing a buy signal. This technical signal suggests renewed bullish momentum.

What Are Analysts Watching Next?

Analysts are watching whether Solana can surpass the November 4 low at $145 to sustain a recovery. This level has acted as a cap on gains since mid-November. A potential close above this level could target the $150 mark.

The Relative Strength Index (RSI) on the daily chart reads 61, above the neutral level of 50, indicating bullish momentum gaining traction.

The privacy hackathon and Solana’s exploration of privacy features could signal a shift in the network’s strategy. This move could attract new users and reinforce Solana’s position in the market.

Solana’s price could extend the rally toward the next resistance level at $160 if bullish momentum continues. The 100-day EMA at $150.61 is also a key target for the price.

The market is also watching whether Morgan Stanley’s filing for spot Bitcoin and Solana ETFs will be approved. This could impact Solana’s price by allowing investors to gain exposure without directly holding SOL.

The Wyoming Stable Token Commission recently launched the first stablecoin issued by a US state on the Solana network. This move highlights growing institutional trust in Solana’s infrastructure.

Analysts are monitoring the network’s adoption metrics, including the number of active addresses and decentralized finance (DeFi) metrics. These indicators could provide insight into the long-term health of Solana as an investment asset.

The Total Value Locked (TVL) across Solana-based protocols has increased from around $8 billion to over $9 billion. This reflects higher capital commitments for lending, liquidity provisioning, and yield-focused strategies.

The number of active addresses on the Solana network has increased from approximately 3.38 million to 3.78 million in early January. This signals increased participation in transfers, trading, and application usage.