Solana's TVL surges: Will the momentum last?

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Solana’s TVL was finally growing at press time, but it was still miles away from its previous historic high.
The TVL could be an indication of SOL’s upcoming bull run.

Solana’s [SOL] Total Value Locked has been a significant concern of late, especially for investors, judging by its hard fall from its 2021 peak. However, the latest data indicated that the TVL was once again experiencing positive growth, as of 30 September.

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To put things into perspective, Solana’s TVL peaked at just over $10 billion in November 2021 before entering free fall. It bottomed out at $210 million in January 2023. However, it has since then been recovering and recently peaked above $327 million.

This meant its TVL was up by roughly $116 million on a YTD basis – confirmation that it was back to positive growth.

BREAKING: @solana‘S TOTAL VALUE LOCKED (TVL) HAS SURGED TO $327.06 MILLION, RECOVERING FROM ITS PRE-FTX POSITION AND REACHING ITS HIGHEST LEVEL IN THE PAST 10 MONTHS. pic.twitter.com/WMJOznEhrw

— Sol Bulletin (@SolBulletin) September 30, 2023

While the TVL’s recovery is significant so far, it pales in comparison to how much it has tanked from its 2021 peak. The chart below demonstrated the extent of the downside.

Source: Solana TVL

Solana’s TVL outflows since November 2021 reflected the bearish state of the market. Does this mean that TVL will recover during the next bull market? While that is not necessarily a guarantee, it will likely be the outcome during the bull market.

Interestingly, the press time TVL recovery aligned with existing bullish conditions.

SOL bull flex alongside the TVL growth

SOL just achieved its most bullish week since mid-July. It achieved a 29% upside in the last seven days and 39.08% from its lowest price point in September. Its $23.12 press time price represented a 65% gain from its lowest 2023 price level.

Source: Tradingview

Based on the price performance, we can see that SOL’s price recovery had some correlation with TVL growth in 2023. The TVL growth in the last week of September could be associated with the price surge.

However, ongoing development activity in pursuit of growth could be responsible for growing confidence in the Solana community.

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

Solana’s on-chain data further revealed that Development Activity has been steadily growing since it hit a monthly low on 12 September, and also hit a new low in the last 24 hours.

Moreover, the Weighted Sentiment metric maintained close to its lowest levels in the last four weeks, indicating that SOL was still far from peak investor confidence.