CPI shock complicates Solana’s $100 test as network activity slumps

Solana [SOL] has extended its bearish run following Wednesday’s broader crypto market sell-off, triggered by hotter-than-expected U.S. inflation data. 

According to the release, September’s Consumer Price Index (CPI) rose 3.7% YoY, exceeding the 3.6% forecast and increasing concerns about interest rates remaining elevated. As a result, treasury yields climbed while the U.S. dollar strengthened, adding pressure to risk-sensitive assets.

The macroeconomic pressure is coinciding with weakening activity across Solana’s ecosystem. DeFi tokens operating in the ecosystem have also dropped significantly. Jupiter [JUP] and Raydium [RAY] are the top losers, with each token’s price dropping by 9.4% and 10.6%, respectively.

The network’s transaction volume has reportedly fallen to its weekly lowest while daily active addresses have also declined, suggesting investors are becoming more cautious following the inflation report.

Network activity signals caution

Solana’s reported transaction-volume metric has fallen to $20.25 million, while daily active addresses have also retreated to just 3.74 million addresses.

These declines could indicate weakening participation as traders respond to the macroeconomic uncertainty. However, its developments as the price action remains tied with the demand zone should be examined further.

A continued decline in active addresses and transaction activity would strengthen concerns about weakening ecosystem demand.

Can SOL bulls reverse the downtrend?

As it stands, the combination of macroeconomic pressure and weakening network indicators presents a challenging backdrop for SOL. The impacts of the weakening on-chains and fundamentals are already evident on the daily chart.

SOL’s price action just invalidated a key ascending trendline support at around $111 a few days ago. The token is now trading below both its 20-day and 50-day EMA at $103, and a drop past the $100 psychological level could amplify the current bearish push.

A recovery in broader market sentiment, accompanied by renewed network activity, could help buyers stabilize price action. Conversely, persistent selling pressure and further declines in ecosystem participation could prolong the correction.

SOL’s near-term outlook will depend on whether buyers return as macroeconomic uncertainty weighs on crypto markets.

Final Summary

• SOL extended its bearish run after September U.S. inflation rose to 3.7% annually, above the 3.6% forecast.
• Solana’s declining transaction volume and daily active addresses signal a weaker participation as investors and traders shy off.