Solana’s native token, SOL, has struggled to break above the $150 resistance level since August 12. Despite this, the network's fundamentals show signs of strength, with total deposits in its decentralized applications (DApps) reaching their highest levels since October 2022. This surge has raised questions among traders about whether these positive network metrics are enough to push SOL’s price back to $190 and what may be hindering its performance.

Diminished Prospects of Solana Spot ETF in the U.S.

One significant factor dampening investor enthusiasm is the recent move by Cboe Global Markets to remove the 19b-4 forms for Solana spot exchange-traded funds (ETFs) from its website on August 16. According to finance lawyer Scott Johnsson, this action suggests that the United States Securities and Exchange Commission (SEC) may have informally rejected the Solana ETF, aligning with Chair Gary Gensler’s prior stance.

Eric Balchunas, a senior ETF analyst at Bloomberg, echoed this sentiment, indicating that although the S-1 filings from the ETF issuers remain active, the likelihood of approval remains low. "The only hope," Balchunas notes, "would be a change in the current SEC administration should Donald Trump win the US presidential election." This sentiment has led to decreased optimism among investors regarding the launch of a spot Solana ETF, muting the immediate effects of Solana’s strong network metrics.

Crypto trader and investor CoinMamba points out that Solana’s appeal has diminished as Ethereum’s average fees have dropped to around $1 for the first time since July 2020, while other blockchains are gaining popularity through memecoin launches—a key demand driver for SOL. CoinMamba also suggests that Solana needs to "find a new narrative," implying that SOL's price growth relies on the discovery of new niches and competitive DApps.

However, this view overlooks the fact that PayPal USD (PYUSD), a stablecoin on the Solana network, reached $620 million in issuance just three months after its launch in May 2024.

Furthermore, Solana continues to attract development, with several projects backed by substantial venture capital funding. For instance, Colosseum, which manages Solana’s hackathon programs, secured $60 million to drive ecosystem growth. Similarly, the Decentralized Autonomous Wireless Network (DAWN) recently raised $18 million for its decentralized broadband initiative.

Solana TVL Growth Was Not Accompanied by Higher Activity

While the success of these initiatives is not guaranteed, Solana’s ecosystem growth is evident, as demonstrated by the rising total value locked (TVL) on the network. As of August 22, Solana’s DApps collectively held 34.9 million SOL, the highest level since October 2022 and a 13.7% increase from the previous month.

However, increased TVL does not necessarily equate to higher user activity, as most DApps do not require substantial deposits. The number of unique active addresses interacting with these applications remains the most accurate measure of actual user engagement.

Over the past 30 days, several of Solana's top DApps saw a decline in user numbers, with most growth concentrated on Raydium and a newly launched high-risk decentralized finance platform. In contrast, previously popular projects such as Helio, Solend, and Marginfi saw fewer than 50,000 active addresses each. Therefore, while Solana's TVL growth is a positive sign, it may not be sufficient to trigger a short-term SOL price rally to $190 or higher.