SOL market depth at an all-time low, and yet…

The SOL from Solana has started a rally which raised the value of the token to its highest level from 19 months. At the same time, however, the depth from market from SOL a sank.

Between September and December, SOLthe blockchain native token Solanahas made a quantum leap in terms of valuation. Its share price climbed from $18 to $75.

This surge defied fears of a price drop due to the sale of FTX’s large SOL holdings, Kaiko pointed out in a report published earlier this week. Better still, SOL last week committed to new annual highs.

Annual ATH, but depth at its lowest

At over $75, the Solana token has reached its highest level in the last 19 months. And thanks to the current buzz around BONK, a Solana-standard token, SOL seems to be benefiting from additional growth leverage.

Kaiko’s analysts are still puzzled by the dynamics of SOL. For, in parallel with this rapid growth in capitalization, the market depth of the token (denominated in SOL) has been steadily declining.

Kaiko notes that depth has fallen by around 50% to 467,000 SOL. An inconsistency? Not necessarily. Dollar price and market depth “have often moved in opposite directions”.

The reason: “market makers actively manage their exposure based on multiple factors, including price movements, volatility expectations and forward-looking price assessments”.

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New rally for SOL?

Nevertheless, Kaiko points out that this correlation is not systematic, particularly in times of market turbulence. For SOL, opposite trajectories in terms of price and depth are not a first.

It’s worth noting that the last time SOL liquidity on CEXs was at similar levels, SOL prices were 30% higher than the current level”, the analysts point out.

Could this be the start of a new growth phase? This is a possible scenario for SOL. Rises were observed on several centralized exchanges under these same conditions in November, Kaiko argues.

The depth of the market at 0.5% on the demand side varied by more than 200,000 SOL in just one hour on Coinbase between November 8 and 10, the report states. The correlation was less pronounced on Kraken, but confirmed between November 15 and 22.

What conclusion can we draw from this? “It could suggest that a lot of market buying was expected on these exchanges at that time,” argues Kaiko.

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