Santiment Highlights Solana's 124% Network Growth as Long-Term Bullish Sign

According to Santiment, Solana's (SOL) network growth has surged 124% since the beginning of September. The analytics provider views this expansion as a bullish indicator for the long term, with the blockchain now adding approximately 1.71 million new wallets each day.

Institutional interest, however, is heading in the opposite direction. US spot Solana exchange-traded funds (ETFs) have seen $17.7 million in outflows during three consecutive sessions, and SOL has declined 1.6% over the last seven days.

Santiment Interprets Solana's Network Expansion as Bullish

Network growth measures the number of wallets engaging with a blockchain for the first time. Santiment's data also indicates that daily active addresses on Solana have climbed 58% in the same timeframe.

That brings the daily active wallet count to roughly 4.27 million unique addresses. Santiment links this activity to valuation, noting that networks with larger user bases have historically supported higher market capitalizations.

“That creates a strong long-term bullish argument for SOL. Networks that attract more users and real utility have historically had greater potential to support higher market caps over time. If Solana keeps expanding its active user base, rising network value can eventually follow,” the post read.

Can User Growth Outweigh Weakening ETF Demand and a Hawkish Fed?

ETF flows present a less positive picture. In the week ending September 25, spot Solana ETFs attracted $188.2 million, their second-largest weekly inflow since launch, according to SoSoValue data.

After that, demand tapered off. The following week saw net inflows slow to $2.4 million, and the funds recorded outflows on October 5, 6, and 7.

The outflows are not limited to Solana, as spot Ethereum ETFs experienced six consecutive days of outflows through October 6.

Macroeconomic conditions add further pressure. The Federal Reserve released minutes from its September meeting, which showed that most officials considered another rate increase likely appropriate by year-end.

Traders have, however, reduced bets on a rate move in October. That means the risk of a hike hangs over the remainder of the year rather than the current month.

Officials also viewed inflation risks as tilted to the upside, with some saying these risks had increased recently. US inflation data scheduled for release on October 14 will serve as the next key test before the Fed's decision on October 28.

Solana Price Declines as October's Track Record Presents Mixed Results

The downward pressure has affected Solana's price, which, along with the broader market, has been falling this week. At press time, SOL was trading at $116.42, down 1.64% over the past 24 hours, based on BeInCrypto Markets data.

Seasonal data provides little clarity for the rest of the month. According to CryptoRank, SOL has posted an average gain of 10.5% in October since 2020. However, a single 80.1% rally in October 2023 accounts for a significant portion of that average.

The median October return is negative, at a 1.59% loss. Over the six completed Octobers since 2020, SOL has closed higher in three and lower in three.

Last October, SOL declined 10.3%. November has historically been stronger, with a median gain of 15.3%.

Veteran trader Peter Brandt, meanwhile, views SOL's weekly chart favorably. He noted a large cup-and-handle pattern forming below a horizontal resistance line. Traders often interpret this pattern as a signal for a continuation once resistance is broken.