Key takeaways

  • Solana (SOL) continues to gain traction as the best-performing asset in the crypto top 20 during 2023

  • The blockchain has just reached a new yearly high for total value locked (TVL) and has enjoyed a significant increase to daily active users (DAU) in recent weeks

  • The SOL price prediction algorithm expects a continuation of the cryptocurrency’s bullish price action

Solana recovery goes from strength to strength as TVL hits new yearly high

The current price of Solana (SOL) is $73.10, climbing +14.24% in the past 24 hours. This follows a period of upward momentum in recent months where SOL has risen +274% since September.

Over the course of 2023, SOL has been the best-performing asset in the crypto top 20 after what had been a disappointing performance during the 2022 crypto winter. The crypto winter culminated in the collapse of FTX and Alameda Research, which had been major backers of the Solana ecosystem from its early development stages, and their collapse proved to be a significant bearish catalyst for SOL which dropped -79% between November and December.

The Solana ecosystem’s recovery since that point is testament to a strong developer community and its attractive technical capabilities. The VanEck bull case for SOL highlighted Solana’s unique potential to support dApps that can handle a billion users, and this potential to usher in a new era for consumer dApps is a key reason why optimism among speculators did not die out despite SOL’s poor price action towards the end of 2022.

Fast forward to the present day, and DeFi on Solana has just hit a fresh yearly high for total value locked (TVL). Increased trading volume for SOL and its skyrocketing price can be seen as primary drivers for the spike in TVL, as SOL is the most-locked asset on the ecosystem’s DeFi applications.

Total Value Locked on Solana, via DeFi Llama

4.5x surge in Daily Active Users provides more insight into Solana’s positive period

While the spike in TVL provides limited insight into Solana’s recent adoption rate due to it being impacted heavily by SOL’s price action, a more telling metric is the number of daily active users. Active DeFi users on Solana has risen 4.5x in the past month alone, with the total number of wallet addresses that have interacted with the ecosystem’s dApps climbing from 36k on November 8th to 162k on December 7th.

While the native asset price certainly indicates a strong performance from the blockchain, it doesn’t tell the full story as price rises can be driven by derivatives traders and other off-chain volume metrics. The surge in daily active users, on the other hand, shows the true scope of Solana’s recent progress in terms of adoption for the blockchain ecosystem itself.

Daily Active Users isn’t a perfect metric by any means as it measures total wallet addresses as opposed to actual unique people. However, the confluence between the skyrocketing SOL price, a new yearly high for Solana DeFi TVL, and a major spike in the blockchain’s daily active users, means that Solana’s recovery is quickly turning into an impressive purple patch.

Solana Daily Active Users, via Dune

Algorithm forecasts a further +11.65% move from SOL heading into 2024

The recent impulsive wave from SOL has taken it from $17.39 to $75.17 in less than 3 months. The SOL price prediction algorithm has forecasted a relatively stable +11.65% gain over the next month that would represent a bullish confirmation of the recent price action.

After extreme volatility to the upside, a shallow consolidation around the peak would increase the likelihood of another breakout to the upside in 2024. You can find out how high the AI thinks that SOL will go after the Bitcoin halving by reading our recent article.

The bottom line

Solana’s purple patch looks set to continue heading into the new year, as the price prediction algorithm has forecasted a consolidation around the recent peak. In confluence with its bullish price performance, more users are flocking back to Solana to make the most of its decentralized application ecosystem.

The overarching result of more DeFi users and a higher SOL price is the network’s TVL reaching a yearly high in recent days. Deeper liquidity pools for DeFi platforms on Solana will have a positive network effect heading into the new year and beyond, and the future now looks increasingly bright for one of the crypto winter’s primary underperformers.