Solana News Today: Solana's Price Soars as On-Chain Activity Plummets: A Bubble's Warning

The Solana (SOL) price has surged by 10-100% in recent months, driven by broader crypto market momentum and anticipation for potential U.S. ETF approvals. However, on-chain data reveals a sharp divergence between price action and network fundamentals, with daily transactions plummeting by 50% since July, from 125 million to 64 million. This decline, coupled with an 80% drop in daily active addresses since May, has raised concerns about the sustainability of the rally. Analysts from Santiment and CryptoQuant note that such bearish divergences historically signal trend reversals, with a 90% probability of sharp corrections.

Technical indicators further underscore the fragility of the current rally. The Chaikin Money Flow (CMF) for SOL has trended below zero at -0.06, indicating weakening liquidity as capital inflows contract. Concurrently, decentralized exchange (DEX) trading volumes on Solana have fallen by 90% year-over-year, reflecting reduced demand for tokens within the ecosystem. While the price has climbed into an ascending parallel channel, analysts caution that declining on-chain activity could force a breakdown below $205, invalidating the bullish pattern.

Institutional interest and ETF speculation have partially offset these concerns. Fidelity, VanEck, and Franklin Templeton have submitted Solana ETF filings to the SEC, with approval odds now exceeding 90%. Analysts estimate these products could attract up to $8 billion in inflows. Additionally, companies like Artelo Biosciences and Ispecimen have allocated funds to strategic Solana reserves, while digital asset treasuries holding 2.5% of SOL's total supply have emerged. These developments suggest institutional confidence in Solana's long-term potential, even as on-chain activity wanes.

Network upgrades, including the Alpenglow protocol reducing block finality time to 150 milliseconds, have bolstered technical resilience. However, the majority of Solana's transactions-80-90%-are voting-related consensus mechanisms, complicating interpretations of the 50% drop. Analysts emphasize distinguishing between validator activity and user-driven transactions: a decline in the latter would signal genuine weakening demand, whereas a shift in the former might reflect protocol efficiency gains. Current data shows total value locked (TVL) in DeFi remains at $12.5 billion, but this metric has fallen 91% from January 2025 peaks.

Market sentiment remains mixed. While the price has held above $200-a critical psychological level-buyers continue to accumulate near this support. Technical setups, including a potential cup-and-handle pattern and a 1.618 Fibonacci extension target of $425, suggest bullish potential. However, the Relative Strength Index (RSI) and MACD indicators remain neutral, leaving room for volatility. If the price breaks above $245, analysts project a path toward $260–$300. Conversely, a breakdown below $210 could trigger deeper corrections to $190.

At $222.29 as of early October 2025, Solana's rally hinges on aligning price momentum with fundamentals. While ETF approvals and institutional adoption offer catalysts, the current bearish divergence underscores risks of a speculative-driven bubble. Investors are advised to monitor on-chain activity, particularly user engagement in DeFi and NFTs, to assess whether the rally is underpinned by genuine network growth or speculative fervor.

Source: [1] BeInCrypto (https://beincrypto.com/sol-price-uptrend-could-be-bear-trap/)

[2] Cryptonews (https://cryptonews.net/news/analytics/31542997/)

[3] CoinCentral (https://coincentral.com/solana-sol-price-network-upgrades-and-institutional-activity-drive-rally-to-237/)

[6] CryptoQuant (https://www.cryptopolitan.com/solana-transaction-drop-raises-bubble-fears/)

[9] The Market Periodical (https://themarketperiodical.com/2025/10/09/solana-news-sol-records-unusual-50-slump-in-transactions-price-reacts/)

[10] Cointelegraph (https://cointelegraph.com/news/sol-could-rally-to-250-if-three-key-factors-align)

[11] FXStreet (https://www.fxstreet.com/cryptocurrencies/news/solana-price-forecast-sol-bulls-eye-250-breakout-but-declining-on-chain-activity-could-delay-move-202510081245)