Solana price fails to gather momentum despite rising institutional flows, MakerDAO likely adoption
- Solana-based funds registered an increase in capital from institutional investors for a ninth consecutive week.
- The Ethereum-alternative chain’s token has failed to respond to bullish developments like MakerDAO CEO considering a migration to the Solana code base.
- Total value of assets locked in the Solana network climbed nearly 7% over the past nine weeks.
Solana (SOL) price remains close to monthly lows even as there are increasing signs of usage and adoption of the Ethereum-alternative blockchain. Increasing institutional capital inflows or support from a top executive in the crypto industry could fuel a narrative for Solana to recover part of its recent losses.
Also read: XRP price likely to hit $0.81 with latest developments in SEC v. Coinbase lawsuit
Solana funds receive $700,000 from institutional investors
CoinShares, a European alternative asset management firm, published its weekly report on Monday on the state of institutional investments in crypto-based funds. According to the report, investment products noted a “cooling-off” period with relatively minor outflows totaling $11.2 million.
However, Solana-based funds saw inflows totaling $700,000 over the past seven days, posting a ninth consecutive week of gains Meanwhile, competitors such as Polygon and Ethereum registered $8.6 million and $3.2 million in outflows, respectively, over the same period of time.
Capital flows by crypto assets (CoinShares report)
Solana’s year-to-date inflows total to $26 million. According to CoinShares, SOL is “the most loved altcoin” among investors at present.
Another recent development in the crypto ecosystem supports the thesis of SOL’s increasing popularity.
MakerDAO CEO Rune Christensen recently said that Maker is keen on migrating to the Solana or Cosmos code base from Ethereum. This was followed by Ethereum creator Vitalik Buterin shedding nearly $600,000 worth of MKR holdings, sparking a controversy. For the complete story check this post.
On-chain data support Solana price recovery
The total value of assets locked (TVL) in a blockchain is a metric used to track investors’ trust and relevance of the asset. Based on data from crypto intelligence tracker DeFiLlama, the TVL of SOL climbed 6.7% from $286.33 million nine weeks ago to $305.75 million, early on Tuesday. The data is consistent with the increase in institutional capital inflows.
Solana TVL seen on DeFiLlama over a nine week period
At the time of writing, Solana price is $19.39, down 0.31% on the day. The altcoin is yet to begin its recovery despite the catalysts outlined above. It remains to be seen whether the capital inflow from institutional investors and MakerDAO’s preference for Solana’s code base fuels a recovery in SOL price.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
