What awaits Solana (SOL) in August?

Solana continues to assert its position as one of the most resilient large-cap altcoins, benefiting from the market-wide bounce back in July. In line with Bitcoin's upward trend, SOL surpassed the 200 USD threshold and peaked at 206.19 USD on July 22.

This price increase has triggered a wave of strong activity across the Solana ecosystem, driving the total value locked (TVL) in the DeFi sector, trading volume on DEX platforms, and overall network revenue. However, signs of "fatigue" have begun to appear as SOL has been pulled back down below the 190 USD mark and is under selling pressure – a signal that investors may be taking profits after the impressive growth in July.

Can SOL maintain its upward momentum in August?

From July 1 to July 22, SOL maintained a stable upward trend and increased in value by over 40%. As the price of SOL rose, the on-chain value of tokens locked in lending pools and vaults on the Solana network also increased, helping the TVL of the entire network to rise.

As of the time of writing, the TVL of Solana is at 9.85 billion USD, an increase of 14% over the past month.

TVL chart of Solana | Source: DefiLlamaAs the demand for SOL increased during that period, trading activity on DEXs within the Solana network also recorded corresponding growth. In the past 30 days, trading volume on DEXs increased by 30%, with total trading value exceeding 82 billion USD just this month.

Monthly DEX trading volume chart of Solana | Source: DefiLlamaThat wave of vibrant activity has translated into higher revenue for the entire network. According to DefiLlama, Solana generated 4.3 million USD in revenue since the beginning of July – a 13% increase from the 3.81 million USD recorded in June.

Monthly revenue chart of Solana | Source: DefiLlama## The Solana ecosystem begins to cool down

However, as we prepare to enter the first days of August, the growth momentum of the Solana network is gradually weakening. At the time of writing, the price of SOL has dropped to around 181 USD, and on-chain signals indicate that the demand for using the network is also weakening.

Chart of daily active addresses on Solana | Source: ArtemisFor example, in the past 7 days, the number of daily active addresses on the Solana network has plummeted sharply with a deep decline of 16%.

This decline reflects the level of user interaction and on-chain activity is decreasing. As the number of active addresses decreases, this reflects a stagnation in transactions, the level of usage of decentralized applications dApp and the overall demand for services on the network.

In the case of Solana, the -16% figure is a clear sign that user participation is weakening, signaling a "cooling off" across the entire network as the new trading month begins.

Along with the decline in network activity, the TVL of the DeFi sector on Solana has also started to contract and decreased by 8% in the past week.

The TVL chart of Solana | Source: ArtemisThis shows that users are withdrawing assets from DeFi protocols on the network, or the value of locked assets is being affected by market volatility.

The bear market appears as the price of SOL approaches a key support level

The decline of SOL in recent days has brought the price of this token close to the 20-day exponential moving average (EMA 20) – an important dynamic support level, currently at 178.25 USD.

EMA 20 is an indicator that measures the average trading price of an asset over the last 20 periods, with greater weight given to more recent prices. If the price of SOL continues to decline and breaks through this key support level – especially when accompanied by low trading volume and weak network activity – then it is highly likely that the price will continue to drop further.

In that worst-case scenario, the price of SOL could plummet straight down to 171.78 USD.

SOL price analysis chart | Source: TradingViewConversely, if market sentiment turns more positive, this negative scenario will no longer be valid. At that point, the price of SOL could completely bounce back to the level of 186.40 USD. If it successfully breaks through this resistance level, SOL may continue its upward momentum to the mark of 190.47 USD.

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