Why Solana’s flourishing DeFi space might not bear fruit for investors

Solana’s NFT ecosystem registered growth last month in terms of sales.
SOL was down by over 9% and market indicators suggested a further downtrend.

Over the last month, Solana [SOL] has witnessed growth in its DeFi space as the blockchain’s TVL went up. Solana Daily’s tweet also pointed out the top Solana dApps by incoming value, which contributed to TVL growth.

Read Solana’s [SOL] Price Prediction 2023-24

However, while the DeFi ecosystem grew, SOL investors were still bearing losses at press time. But will Solana’s achievement in the DeFi space be enough for the blockchain to paint its price chart green?

A bird’s eye view of Solana’s ecosystem

DeFiLlama’ data revealed that Solana’s TVL gained upward momentum and has been on the rise for several weeks. Therefore, a rise in the metrics can be considered growth in the DeFi ecosystem of a blockchain. At press time, SOL’s TVL stood at $1.12 billion.

Source: DeFiLlama

Solana Daily’s latest tweet also highlighted the top dApps in the ecosystem by incoming value in the last seven days. These dApps definitely contributed to the blockchain’s TVL growth. As per the tweet, the top 3 Dapps were Sharky, Parrot, and Saber Labs.

Top Solana Dapps by Incoming Value Last 7D

@SharkyFi
@gopartyparrot
@Saber_HQ @MarinadeFinance @solendprotocol @port_finance @SquadsProtocol @mercurialfi @ProjectLarix @SolanartNFT @DivvyBet @helio_pay @RaydiumProtocol @png_fi @degencoinflip @dappradar #Solana $SOL pic.twitter.com/xd61KzRbzM

— Solana Daily (@solana_daily) August 4, 2023

Not only that, but as a matter of fact, Solana’s captured value has also increased over the past months. As per Artemis’ data, SOL’s fees started moving upward in the middle of June 2023.

Thanks to the hike in fees, the blockchain’s revenue also went up. However, it should also be noted that both metrics dropped slightly during the last few weeks.

Source: Artemis

Apart from DeFi, growth was also noted in the blockchain’s NFT ecosystem. CryptoSlam’s data pointed out that Solana NFTs’ sales volume increased by more than 5% in the last 30 days.

Additionally, its total number of buyers, sellers, and transactions also went up by 14%, 18%, and 5%, respectively.

SOL still has reasons for concern

Solana’s aforementioned achievements did not reflect its on-chain performance. For instance, its social volume declined, reflecting a drop in its popularity. SOL’s trading volume also fell, suggesting a lower willingness of investors to trade the token.

However, its funding rate was green. This implied that SOL was in demand in the derivatives market.

Source: Santiment

Mentioning SOL’s price action, the token’s price was heavily under the bears’ influence. As per CoinMarketCap, SOL was down by over 9% in the last seven days. At press time, it was trading at $22.77 with a market cap of more than $9 billion.

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A look at SOL’s daily chart suggested that the price trend might continue. The distance between the 20-day Exponential Moving Average (EMA) and the 55-day EMA was declining.

This increased the chances of a bearish crossover. Moreover, Solana’s Relative Strength Index (RSI) and Chaikin Money Flow (CMF) both took a sideways path under the neutral mark, which was bearish.