Solana’s native token, SOL , has been unable to break above the $150 resistance level since Aug. 12. However, some network metrics have shown strength, including the total deposits in its decentralized applications, which have surged to their highest level since October 2022. Traders are now questioning whether these improvements in network fundamentals are sufficient to drive SOL’s price back to $190 and what factors may be hindering its performance.

Diminished prospects of Solana spot ETF in the US

One reason for the lack of enthusiasm among investors stems from Cboe Global Markets’ recent decision to remove the 19b-4 forms for Solana spot exchange-traded funds (ETFs) from its website on Aug. 16. Some market participants, including finance lawyer Scott Johnsson, suggest that the United States Securities and Exchange Commission has informally rejected the Solana ETF, consistent with Chair Gary Gensler’s earlier stance.

Eric Balchunas, a senior ETF analyst at Bloomberg, shares a similar view, noting that while the S-1 filings from the ETF issuers remain active, the chances of approval are slim, with the only hope being a change in the current SEC administration should Donald Trump win the US presidential election. As a result, investor optimism regarding the potential launch of a spot Solana ETF has diminished, reducing the immediate impact of Solana’s network metrics.

Crypto trader and investor CoinMamba, for example, believes Solana’s appeal has waned as Ethereum’s average fees have dropped to around $1 for the first time since July 2020, while other blockchains are gaining traction with memecoin launches, a significant driver of demand for the SOL token.

CoinMamba also suggests that Solana needs to “find a new narrative,” indicating that the outlook for SOL’s price appreciation depends on exploring new niches and discovering decentralized applications (DApps) that can offer a competitive edge. However, this analysis overlooks the fact that PayPal USD (PYUSD), a stablecoin issued on the Solana network, reached $620 million in issuance, despite being launched less than three months ago in May 2024.

Moreover, several projects continue to be developed on Solana, many of which are backed by million-dollar funding rounds from experienced venture capitalists. Examples include Colosseum, a company tasked with managing Solana’s hackathon programs after securing $60 million to accelerate ecosystem growth, and Decentralized Autonomous Wireless Network (DAWN), a decentralized broadband initiative that recently raised $18 million.

Solana TVL growth was not accompanied by higher activity

While success is not guaranteed, the growth of the Solana ecosystem is undeniable, as evidenced by the increasing total value locked (TVL) on the network, which suggests there is still room for SOL’s price to improve. On Aug. 22, Solana network DApps collectively held 34.9 million SOL, the highest level since October 2022, representing a 13.7% increase from the previous month.

Notable highlights from the past 30 days include the decentralized exchange Jupiter, which reached a TVL of $1.06 billion, and Kamino, a lending and leverage platform currently holding $1.48 billion in deposits. It is also worth noting that, in USD terms, Solana has $5 billion in TVL, surpassing its closest competitor, BNB Chain, which holds $4.5 billion.

While growth in TVL is generally a positive sign, it doesn’t necessarily indicate an increase in user numbers or activity, as most DApps do not require a substantial deposit base. The number of unique active addresses interacting with those applications is the most reliable proxy for gauging the actual number of users.

Over the past 30 days, half of Solana’s top DApps experienced a decline in user numbers, with most of the growth concentrated on Raydium and a recently launched high-risk decentralized finance platform. Conversely, some projects that previously garnered attention, such as Helio, Solend, and Marginfi, saw fewer than 50,000 active addresses each. Therefore, Solana’s TVL growth alone is insufficient to support a short-term SOL price rally targeting $190 or higher.