Is Solana’s SOL Price at Its Peak? An Analysis of Recent Outflows and Market Correction
Institutional investors are displaying waning interest in Solana exchange-traded products (ETPs), as evidenced by a $39 million outflow, identifying it as the least favored trade among crypto funds. The latest Digital Asset Funds Weekly Report by CoinShares reveals that the overall inflow into crypto funds was modest, totaling $30 million for the week ending August 16. Despite this, Solana ETPs experienced a record-breaking outflow of $39 million from August 12 to August 16. Furthermore, the monthly performance review unveiled that Solana funds saw outflows of $34.4 million in August.
According to CoinShares, the outflows from Solana investment products can be attributed to the declining volumes of memecoins that heavily depend on the layer-1 blockchain. James Butterfill, the head of research at CoinShares, stated that Solana’s outflows were a consequence of a significant decline in trading volumes of memecoins, which have been a significant driver for the blockchain platform.
This trend is corroborated by data from Dune, which indicated an 86% collective drop in memecoin transaction flows across all blockchains, including Solana, from the March peak of approximately $999.55 million to $177.75 million by the week ending August 18. Such a substantial decrease in trader interest and confidence in the memecoin sector has inevitably impacted the native token of the blockchain they are built on, such as Solana’s SOL.
In contrast, multi-asset or altcoin funds have outperformed Bitcoin ETPs in August, recording an inflow of $41.4 million month-to-date. Despite a 20% rebound from its August 5 lows, the crypto market has undergone a correction, leading to a total capitalization drop to $2.07 trillion by August 19. Additionally, the total assets under management of institutional investment products experienced a slight decline from $84.93 billion for the week ending August 9 to $83.76 billion last week.
CoinShares also reported that the total inflows for 2024 have reached $22.16 billion year-to-date, while trading volumes across all digital assets have decreased by nearly 50% week-on-week to $7.6 billion. This decline has been attributed to recent macroeconomic data, indicating that the Fed is less likely to cut interest rates by 50 basis points in September.
Regarding price performance, SOL has seen a 12% drop since its recovery to $163 on August 9 and is currently trading at $143.50. On the other hand, BTC has experienced a 4% decline since its recovery to $62,000, now trading at $59,001.
It is important to note that this article does not provide investment advice or recommendations. All investment and trading decisions involve risk, and readers are encouraged to conduct their own research before making any decisions.
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