Solana (SOL), the native cryptocurrency of its eponymous network, continues to show weak performance since March and its price is moving further away from its all-time high.
In early August, digital assets took a major hit due to the crash financial crisis that caused the event known as “Black Monday”. In the case of SOL, in addition, it must be added that in recent weeks there have been a significant decrease in Solana network activity.
Currently, the altcoin’s price fell from $153 to $129 in 30 days and is 50% below the $259 area, its all-time high (ATH).
SOL has managed to maintain its position as the fifth cryptocurrency with the largest market capitalization with $60 billion and is only surpassed by bitcoin (BTC), ether (ETH), tether (USDT) and BNB.
The increase in its capitalization despite the fall in the token price happens because it has an inflationary monetary system.
In the weekly market report of Coinbase, the second largest cryptocurrency exchange in the world, it is explains that What has influenced the price of SOL is the decline in the activity of its ecosystem since the beginning of August. “Transaction volumes on decentralized exchanges (DEX) for seven consecutive days, for both Ethereum and Solana, have reached levels last seen in February of this year,” the weekly market report highlights.
In this regard, the report emphasizes that Trading volume on Solana fell from $1.5 billion to $752 million. This is a 50% drop from August 18 to September 6, as seen in the chart on Data Explorer on-chain Artemis.
In turn, the Coinbase report focuses on the fact that Solana’s fall is due to the fragmentation of activity in pump.funthe network’s memecoin creation platform. In this regard, it is clarified:
“Pump.fun saw average daily revenue of $761,000 from June to August 2024. In the past month, this has fallen by 48% to an average of $414,000, proportionally in line with the decline in Solana’s total DEX volumes.”
Coinbase Weekly Market Report.
For the cryptocurrency exchange’s research team, the drop in pump.fun activity is directly related to the emergence of SunPump, the Tron network’s memecoin creation and trading platform.
Competition for pump.fun
As CriptoNoticias has been reporting, pump.fun allows users to create their own memecoins without the need for prior technical knowledge as it provides a simple and intuitive interface. Since its launch in February 2024, 1,979,124 assets have been created, generating a total of 703,916 SOL, or more than $89 million.
However, in the following Dune Analytics graph, you can see how network activity was decreasing, as indicated by the Coinbase report, and which coincides precisely with the appearance of the SunPump.
Tron’s memecoin trading platform has been showing great growth one month after its launch. From August 9th to the time of publication of this note, 79,265 tokens were created, generating a total of 31 million TRX, the equivalent of more than 4 million dollars.
Lack of regulatory clarity
Coinbase also mentions that “the network activity follows a series of enforcement actions by the U.S. Securities and Exchange Commission (SEC)” and adds: “They have brought renewed attention to the need for clear regulations in the space.”
As reported by CriptoNoticias, in the lawsuit filed by the organization led by Gary Gensler against the Binance exchange It is clarified that SOL is a security (security) and therefore must be regulated.
Among its arguments, the SEC considers that there is evidence that SOL is a stock of Solana Labs, the organization that develops products to expand the ecosystem of that network.
However, in an update to the complaint, the SEC explains that it “intends to seek leave to amend its complaint.” One of the changes is that, for the time being, will not insist that a court determine whether SOL and other cryptocurrencies are a security.
That is why, for Coinbase, the lack of regulatory clarity regarding the asset is influencing the activity of the Solana network and, therefore, its price.