Earlier this week, the price of Solana (SOL) reached a high of $210 after an impressive rise. The price is now undergoing an understandable correction and is now at $172. The hype surrounding the blockchain network seems to have died down somewhat. However, data shows that activity on the Solana network is still extremely high. But competition is increasing.
SOL declines – cause for concern?
Solana has established itself as the dominant blockchain in recent years. As number five in terms of market capitalization and number three in terms of total value of assets within the network, Solana has simply become an indispensable part of the industry.
However, the significant correction that SOL price is currently undergoing may deter many investors. The underlying data can provide more clarity on Solana’s fundamental strength. The trading volume on the network is still shockingly high. Since March 13, volume on Solana has increased by 55 percent. In comparison, volume on BNB Chain (BNB) and Polygon (MATIC) increased by 2 percent and 7 percent, respectively.
The reason for this huge volume is the Solana memecoin hype. A memecoin party has been taking place on Solana for weeks. Countless new memecoins are launched on the network every day, and investors are eager to invest in these tokens in hopes of making a big splash. Examples of these tokens include Dogwifhat (WIF), Bonk (BONK) and more recently Book of Meme (BOME). The latter token recorded a whopping $270 million in trading volume in the 24 hours after its launch.
Base goes into battle with Solana
Notably, the Solana memecoin hype appears to have died down somewhat. This is related to the Ethereum (ETH) Dencun update. This update, which took place last week, significantly reduced transaction costs for Layer 2 solutions such as Arbitrum (ARB) and Base.
Base, Coinbase’s Layer 2 solution, appears to benefit the most from this shift in interest. Trading volume on Base increased by 77 percent within a week. Countless memecoins are also in demand on Base. There currently seems to be a real memecoin battle between Base and Solana.
Despite Base’s surge, activity on Solana is still high. The recent decline in SOL price is therefore not a cause for concern. As long as activity on Solana continues, it seems to be a matter of time before SOL price starts a new uptrend.
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