Solana (SOL), a cryptocurrency often dubbed as an "Ethereum killer," has seen a steady recovery in its price despite a dip in the number of daily active addresses on its network, according to Austin Federa, Head of Strategy at the Solana Foundation. This divergence is attributed to a decrease in bot activity following recent network upgrades.
Following a 45% drop, SOL found support at $17.29 and has been on a rally, bolstered by bullish demand around the psychological level of $18.00. Technical indicators such as the Relative Strength Index (RSI) and the Awesome Oscillator (AO) suggest this upward trajectory could persist.
Federa explains that the network upgrades have resulted in less economic incentives for bots to operate on Solana's network, leading to their significant reduction. In contrast, human users who pay network fees are driving the recovery rally. The number of these users is believed to reflect actual retention data.
Similar to Ethereum's features, Solana now allows traders to pay a priority fee for NFT minting arbitrage instead of using bots, contributing further to the reduced bot activity on the network.
Data from DeFiLlama shows that Solana's transaction fees have been steadily increasing from November 2022 to September 2023, rising from $23,680 to $46,430 – a 96% increase over ten months. This metric is often viewed as more indicative of an asset's directional bias as it represents users' willingness to pay for using a blockchain at any given time.
The total number of tokens that can be minted or issued for each cryptocurrency is determined by its developer or creator. For instance, since Bitcoin's inception, a total of 19,445,656 Bitcoins have been mined. Market capitalization is calculated by multiplying an asset's circulating supply by its current market value. In early August 2023, Bitcoin's market capitalization surpassed $570 billion, based on over 19 million BTC in circulation and a Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that are traded within a certain timeframe. This metric is used to gauge market sentiment, with an increase often signifying higher demand for a particular asset. Funding rates are designed to incentivize traders to take positions and ensure that perpetual contract prices align with spot markets. A positive funding rate indicates that the perpetual contract price exceeds the mark price, leading bullish traders to pay those in short positions. Conversely, a negative funding rate implies that perpetual prices are below the mark price, resulting in traders with short positions paying those who have opened long positions.
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