Solana has observed an increase of more than 20% in the past week. Here’s what on-chain data says regarding whether this is sustainable or not.
Here, the social volume refers to a metric that measures the total number of unique posts or threads on a given social media platform that is making at least one mention of SOL. This metric can tell us about the degree of discussion that the coin is currently receiving on the website in question.
Now, below is a chart that shows the trend in the Solana social volume on four major social media platforms: Telegram, Reddit, Twitter, and 4chan.
Here is a chart that displays the trend in this indicator:
Solana Trading Volume Has Remained Low Despite Price Rise
In its latest insight post, the on-chain analytics firm has looked at the underlying metrics of Solana to see what has been driving the latest increase in the price.The firm has looked at the “social volume” of the cryptocurrency for various social media platforms and has found that the asset has seen elevated interest on Reddit recently.
Looks like the value of the metric has been relatively low for most of these platforms | Source:As displayed in the above graph, the Solana social volume on Reddit has seen some spikes as the cryptocurrency has risen during the past week or so. The other platforms, however, haven’t observed that much discussion related to the asset. A notable spike in the social volume on Reddit also occurred before the coin’s 5% surge during the past 24 hours. This may imply that interest from users on the platform could partly be helping fuel the rise.
In terms of the actual trading volume, though, SOL has continued to observe muted activity, despite the growth.
The value of the metric hasn't been too high recently | Source:Interestingly, the initial, strong rise that Solana enjoyed was accompanied by elevated volumes, but at the start of this month, the indicator’s value noted some decline. Since this drop in volume, SOL has mostly moved sideways. Generally, for any price rise to be sustainable, high trading volumes are required. This is due to the fact that participation from a large number of traders is needed to provide enough fuel for any such price move to go on. Despite the sharp growth that Solana has observed today, the trading volume remaining at low values would suggest that the wider market isn’t finding the rally interesting enough to make moves on the network. Naturally, if the rally has to go on for an extended period, volumes may have to return to the market.
There is also the fact that the SOL funding rates (a measure of the periodic fee that futures traders are exchanging between each other) on Binance and DyDx have become quite positive recently.
Longs are dominating the market | Source:From the graph, it’s visible that the earlier increase in the asset’s price may have been helped by shorts being liquidated in the market – as the funding rates had been highly negative then. As long contract holders are the majority force in the futures market now, the chances of a long squeeze taking place are higher now. In this case, if one does take place, the price would feel a bearish effect.
SOL Price
At the time of writing, Solana is trading around $20, up 20% in the last week.SOL has shot up in the past day | Source:
Featured image from GuerrillaBuzz on Unsplash.com, charts from TradingView.com, Santiment.net
