Fidelity has described Solana as "an emerging piece of financial market infrastructure" in its latest report, according to AMBCrypto. The assessment comes as Solana's on-chain trading activity has grown significantly, even as its native token SOL has struggled in the recent Q4 rally.
Trading Volume and Trade Count Growth
According to the report, Solana's trading volume was about 15% of the big five U.S. stock exchanges combined this year. Additionally, its trade count has grown nearly 100x since 2022, compared with just 1.76x growth across major U.S. stock exchanges.
This suggests that Solana's competitive edge is increasingly tied to on-chain trading activity. From a structural perspective, this adds weight to Solana's DeFi growth, as increased trade drives higher transaction fees and overall revenue within the ecosystem, providing a clearer utility story for SOL.
Price Weakness Amid Strong Fundamentals
SOL has been the worst performer in the Q4 rally, currently trading just a few points above $50 and having recently fallen below $70 once again. This has led to another wave of weak hands taking profits, with $50 back on the radar.
However, if on-chain demand continues to grow, SOL may have strong fundamentals underlying the price weakness. Increased network activity could help maintain the long-term outlook, creating a potential longer-term investment. The bigger question now is whether increased macro liquidity can cause the on-chain growth to filter through to SOL's price.
Macro Liquidity and On-Chain Activity
Liquidity and capital flows into risk assets tend to move together. This is evident in the stablecoin market, where total market cap has slipped below $300 billion following a 1.7% weekly decline. This marks the first drop below this level since the market rallied toward $320 billion ahead of last October's crash. The result has been Solana breaking below the $50 level.
There is still not enough liquidity in the stablecoin market to create strong bullish momentum, although there are some positive signs that liquidity is increasing. Circle has just created $250 million more USDC on the Solana blockchain, and the U.S. M2 money supply has gone up $113 billion to record levels of $23.41 trillion.
In essence, macro liquidity is expanding, potentially setting the stage for capital to flow back into crypto. This places Solana in an interesting position: while price movement has been poor, on-chain activity and liquidity overall are showing signs of improvement. Should capital flow back into the market, SOL's increasing on-chain activity could be a major factor in driving the next rally.
In this context, Solana's 15% share of trading volume could be just the start. Increased macro liquidity can increase on-chain activity, which will increase the fees on the network, thus improving revenue. An increase in capital flowing into the crypto market will put Solana in a great position to turn this growing adoption into its next major growth phase.
Final Summary
- Fidelity highlights Solana's growing adoption, with trading volume reaching 15% of the five major U.S. stock exchanges combined.
- Rising USDC supply and record U.S. liquidity could bring fresh capital into crypto, boosting Solana's network activity and supporting SOL's next rally.
