Solana Price Retrace But Network Activity Remains at Highs

Solana's native token, SOL, has experienced an impressive surge of 69% over the past month, reaching a high of $208 on March 18. However, SOL fell by over 16% since March 18, amidst a wider crypto market dip. SOL has since bounced from the $170 mark, a significant support level for SOL. With Bitcoin struggling to maintain levels above $70,000, speculation about an altcoin season has arisen, creating both bullish and bearish arguments.

Over the past month, Solana-based memecoins like Dogwifhat (WIF) and Bonk (BONK) experienced significant rallies, leading to a surge in memecoin trading on the network. Solana benefited from the increased activity, with a surge in volume and active addresses engaging with its DApps. Notably, the decentralized exchange (DEX) daily trading volume on Solana has managed to surpass Ethereum on various days. The latest surge in activity was driven by the frenzy surrounding memecoins presales, particularly the launch of Book of Meme (BOME) and Slerf (SLERF), which generated billions in trading volume days after launching.

However, critics of Solana point out that the increased demand for the network has led to higher fees and more failed transactions. Validators experienced delays of up to 40 seconds on March 16, resulting in nearly half of the transactions failing within a 20-minute span.

Furthermore, analysts raise concerns about the significant issuance of tokens to cover Solana's validator costs, which inflates the supply of SOL. Additionally, the large number of tokens held by the bankrupt FTX exchange's estate poses a potential risk of sell-offs in the near future.