Solana's performance has undoubtedly been remarkable since the market bottomed in November 2022. From price appreciation to the growth rate of capital inflows, it has surpassed Bitcoin and Ethereum in all aspects. More importantly, the continued positive capital inflow has driven a net liquidity increase of $55 billion, providing strong support for Solana's recovery and price surge.
Despite significant profit-taking and supply allocations in the market, Solana investors as a whole have yet to reach a state of widespread book profitability - a point typically associated with market tops forming. This suggests that there is still room for further growth in the current cycle.
Solana’s Unique Advantages
Over the past four years, Solana has gradually become the focus of the market with its rapid innovation and strong community support. From stunning growth during the 2021 bull market to the trough after the FTX crash, and then to the remarkable recovery thereafter, Solana has proven its tenacious vitality and unique competitive advantages with actions.
After the FTX crash that caused the SOL price to drop to a low of $9.64, Solana has achieved more than 2,143% growth in two years. More notably, Solana has outperformed Bitcoin and Ethereum on 344 of the 727 trading days.
Changes in capital flows are a key indicator for assessing asset growth. Through the relative changes in realized market capitalization, we can clearly see the inflow and demand of capital. Data shows that since the end of 2022, Solana's capital growth ratio in 389 trading days has far exceeded that of Bitcoin and Ethereum, showing strong demand and market enthusiasm.
Interpretation of popular capital indicators
The “Top Realized Market Cap” metric shows that Solana has surpassed Ethereum in capital holdings by active accounts for the first time in the past seven days. This trend showed a significant upward inflection point in early 2024, marking the influx of new capital driving Solana's rapid growth.
At the same time, on-chain capital flows also provide valuable insights. Since the beginning of September 2023, Solana's net capital inflows have remained positive, peaking at $776 million per day. This surge in liquidity not only stimulates price appreciation, but also indicates the market's optimistic expectations for Solana's future.
Profit Taking and Distribution
While capital inflows continue to increase, profit-taking has also become an important part of on-chain trading. Data shows that token trading in the 24-hour, 1-day to 1-week, and 6-month to 12-month ranges contributed the most to sell-side pressure, accounting for a total of 51.6% of realized profits. This distribution shows that different types of investors are actively participating in the Solana market.
Meanwhile, Solana’s realized market capitalization has grown significantly from $22 billion to $77 billion, reflecting the asset’s appeal among both institutional and retail investors.
Is Solana’s market overheated?
To assess whether the market is overheated, we can use MVRV (market value to realized value ratio) as a reference. From historical data, when this ratio breaks through one standard deviation, it often marks the macro top of the market. However, the current price of SOL is still consolidating between the mean and 0.5 standard deviations. This shows that although the market temperature is relatively high, there is still some room for overheating.
With the launch of new on-chain analytics tools, we are gaining deeper insights into Solana investor behavior. Whether institutional or retail, Solana’s appeal is reflected in its continued strong capital inflows and price performance.
From the low of $9 to the current brilliant performance, Solana's recovery path proves its important position in the market. Supported by strong capital inflows, SOL's future potential remains huge. However, for investors, paying attention to market dynamics and reasonably assessing risks are still necessary strategies.
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