Solana's native token, SOL, has struggled to break above the $150 resistance level since August 12. Despite this, key network metrics show robust performance, with total deposits in decentralized applications surging to their highest level since October 2022. Investors and traders are now questioning whether these fundamental improvements can propel SOL's price back to $190—and what factors might be holding it back.
Why SOL’s Price Action Lags Behind TVL Growth
Solana’s Total Value Locked (TVL) has seen impressive growth, reaching 34.9 million SOL by August 22—a 13.7% increase from the previous month and the highest level in nearly a year. In dollar terms, Solana’s TVL of $5 billion now exceeds that of BNB Chain, which stands at $4.5 billion.
Major contributors to this growth include decentralized exchange Jupiter, with a TVL of $1.06 billion, and lending platform Kamino, which holds $1.48 billion in deposits. Despite these numbers, active user participation across the ecosystem tells a more nuanced story.
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Nearly half of Solana’s top decentralized applications saw a decline in active addresses over the past 30 days. While platforms like Raydium and newer high-risk DeFi applications attracted attention, established projects such as Helio, Solend, and Marginfi each recorded fewer than 50,000 active addresses. This suggests that TVL growth has been driven more by capital inflow than by a broad increase in user activity.
Factors Limiting SOL’s Upside Potential
Several market and regulatory factors appear to be tempering investor enthusiasm for SOL, even as on-chain metrics improve.
Diminished Hopes for a Solana ETF in the US
Cboe Global Markets recently removed 19b-4 filings for a Solana spot exchange-traded fund (ETF) from its website on August 16. Market analysts, including financial lawyer Scott Johnsson and Bloomberg ETF expert Eric Balchunas, interpreted this as a sign that the SEC has informally rejected Solana ETF proposals.
Balchunas noted that while S-1 filings from issuers remain active, approval appears unlikely unless there’s a change in the SEC’s leadership following the US presidential election. This has reduced speculative interest based on potential institutional adoption via ETFs.
Competitive Pressure from Other Blockchains
Some traders argue that Solana has lost some of its momentum due to improved scalability and lower fees on competing networks. For instance, Ethereum’s average transaction fee dropped to around $1 for the first time since July 2020. Meanwhile, other blockchains have captured retail attention through memecoin launches—a significant driver of demand for native tokens like SOL.
Crypto investor CoinMamba remarked that Solana needs to “find a new narrative,” suggesting that SOL’s price depends on the network identifying new niches and high-utility dApps that offer a competitive edge.
Positive Developments in the Solana Ecosystem
Despite these challenges, Solana continues to show signs of organic growth and innovation.
Major Stablecoin and Infrastructure Expansion
PayPal USD (PYUSD), issued on the Solana network, has reached a circulation of $620 million less than three months after its launch in May 2024. This indicates growing adoption of Solana for real-world payment solutions and stablecoin transfers.
Additionally, several well-funded projects are under development within the ecosystem. Colosseum, an organization that manages Solana hackathon projects, raised $60 million to accelerate ecosystem growth. DAWN, a decentralized broadband initiative, recently secured $18 million in funding. These investments signal strong venture capital confidence in Solana’s long-term potential.
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Will SOL Price Eventually Reflect TVL Growth?
TVL growth is generally a positive indicator, but it doesn’t always translate directly into price appreciation—especially if driven by a small number of applications or large depositors rather than widespread usage.
For SOL to reclaim the $190 level or higher, the network may need to demonstrate more balanced growth across a wider range of dApps and user segments. Increased activity in areas such as decentralized lending, NFT trading, gaming, and real-world asset tokenization could help build a more sustainable bullish case.
Market sentiment will also play a key role. A shift in regulatory outlook, broader crypto market recovery, or breakthrough applications going mainstream could renew momentum behind SOL.
Frequently Asked Questions
What does TVL mean in DeFi?
TVL stands for Total Value Locked. It represents the total amount of assets deposited in decentralized finance protocols. High TVL generally indicates strong user confidence and liquidity within a blockchain ecosystem.
Why hasn’t SOL’s price increased with TVL?
Price depends on multiple factors beyond TVL, including market sentiment, regulatory news, competition, and overall crypto market trends. In Solana’s case, reduced ETF optimism and lower active user counts in key dApps have offset positive TVL momentum.
Can Solana compete with Ethereum?
Solana offers higher throughput and lower transaction costs than Ethereum, making it attractive for high-frequency applications like trading and gaming. However, Ethereum has a larger developer community and more established infrastructure. Both blockchains continue to evolve and capture different market segments.
What is a spot ETF and why does it matter?
A spot ETF holds the actual cryptocurrency and offers investors a regulated way to gain exposure without直接 holding the asset. Approval of a spot Solana ETF would likely attract institutional investment and improve liquidity, but regulatory hurdles remain significant in the US.
Is Solana’s growth sustainable?
Recent investments in infrastructure, stablecoin integration, and venture funding suggest strong foundational growth. However, sustainability will depend on the network’s ability to maintain security, improve usability, and expand into new use cases beyond speculative trading.
Should I invest in SOL based on TVL growth?
TVL is one useful metric, but it shouldn’t be the sole factor in investment decisions. Consider the broader market context, project developments, regulatory environment, and your own risk tolerance before investing.