jakiro
Author: UkuriaOC, CryptoVizArt, Glassnode; Compilation: Baishui, Bitchain Vision
summary
-
Since the November 2022 cycle lows, Solana has outperformed Bitcoin and Ethereum from the perspective of price appreciation and relative capital inflows.
-
Continuous positive capital inflows resulted in a $55 billion increase in net liquidity, providing a huge boost to price appreciation.
-
Despite the massive profit-taking and distribution, Solana’s investors have not yet reached the level of unrealized profitability (book gains), which historically aligns with the long-term macro top, suggesting that there is room for further growth throughout the cycle.
Comparison of SOL, BTC, ETH
Over the past 4 years, Solana has attracted great interest and attention from investors and market speculators.Initially, the asset saw a huge increase during the 2021 bull market, but then faced major challenges following the FTX crash, resulting in a severe oversupply.
After plunging to a staggering low of $9.64, Solana has achieved a significant recovery, achieving a staggering 2,143% increase over the past 2 years.This impressive price performance has allowed Solana to outperform Bitcoin and Ethereum in 344 of the 727 trading days since the FTX event, indicating a significant increase and demand for the asset.
The surge in price movements has also attracted a large amount of new capital to the asset.We can use the relative implemented cap changes in Solana, Bitcoin, and Ethereum as an indicator of evaluating and comparing capital flows into each network.
Since its December 2022 low, Solana’s percentage of capital growth in 389/727 trading days is much higher than Bitcoin and Ethereum, highlighting the significant increase in its liquidity.
To assess the demand side momentum, we can track capital inflows from new investors, which is called the “hot achieved cap”.This indicator measures capital held by active accounts over the past 7 days.
When comparing the scale of new capital entry assets between Solana and Ethereum, we can observe thatSolana’s new investor demand surpassed Ethereum for the first time in history, highlighting its strong demand profile.
It is worth noting that Solana’s hotly achieved cap rose sharply before the beginning of 2024, marking an upward inflection point in the SOL/ETH ratio, with the influx of new capital driving growth.
Explore SOL Capital Flows
After determining Solana’s excellent performance relative to other major assets, we will now examine the scale and composition of Solana’s capital flows.
By evaluating the net realized profit/loss metrics, we can visualize the daily changes in capital flows on Solana.When this indicator is positive, it represents net capital creation (money trading profit); when the indicator is negative, it represents net capital creation (money trading loss).
We observed thatSolana has maintained a positive net capital inflow since early September 2023, with only a small capital outflow during this period.The continued inflow of liquidity helped stimulate economic growth and price appreciation, achieving a staggering peak of $776 million inflows per day inflow of new capital.
We can use the age breakdown of the realized profit indicators to evaluate which subgroups contribute the most to seller pressure.Here, we calculate the cumulative profit settlement volume since January 2 by currency age.
-
24 hours: US$3.1 billion
-
1 day-1 week: US$13.7 billion
-
1 week to January: USD 14 billion
-
January-March: US$8.5 billion
-
June-December: US$15.7 billion
-
1 year to 2 years: US$8.2 billion
-
2-3 years: USD 8.2 billion
-
3-5 years: USD 3.5 billion
It is worth noting that tokens with ages of 1 day-1 week, 1 week-1 month and June-December are important contributors to seller pressure, and each token records a considerable scale of profits.Total they account for 51.6% of the realized profits, showing a balanced distribution of market influence.This emphasizes the idea:Solana, as an asset, is considered an investment opportunity for all types of investors.
During the same period, large capital inflows allowed Solana to accumulate more than $55 billion in USD liquidity, increasing the cap that had been achieved from $22 billion to a staggering $77 billion.
Is the SOL market overheated?
In the previous section, we evaluated large amounts of profit-taking and supply allocation, so it became cautious to assess the extent of market overheating.
To do this, we can use the MVRV ratio to define pricing ranges to assess the extreme deviations in investor profitability relative to the long-term average.Historically, breaking through more than 1 standard deviation is consistent with the long-term macro top.
Currently, SOL prices are consolidating between the average and the +0.5 standard deviation range.This showsThe market is relatively hot, but it also shows that there may be room for further operation before the profits held by ordinary investors reach the extreme range of +1σ, leading to a series of profit settlements and distributions.
Summarize
With the release of new segmentation indicators, we are able to analyze the behavior of investors during the dynamic market of Solana’s assets, providing important information for the mechanisms of capital creation and destruction.
Solana’s rapid recovery and subsequent price increases are impressive, and it has successfully raised significant amounts of capital from institutional and retail investors.
