- Solana [SOL] has dropped to a seven-month low, losing the $120 support level after a 10% weekly decline.
- Sell-side pressure has dominated due to FTX unlocks and weak hands exiting, with no strong demand zones forming since its fall from $270.
- Solana’s network activity has plummeted, with transaction fees dropping 85% from January’s peak and active addresses declining by 35%.
- Total Value Locked (TVL) on Solana has fallen from $14.50 billion in January to $8.15 billion, signaling a major liquidity exit.
- With weak on-chain demand, heavy liquidations, and continued unstaking, SOL risks further losses, potentially dropping to $100 if Bitcoin fails to reclaim critical support.
Solana’s Price Collapse: A Perfect Storm
Solana’s recent price action has been nothing short of brutal, with the cryptocurrency plunging to a seven-month low and losing the critical $120 support level. Over the past week, SOL has suffered a 10% decline, driven by a combination of sell-side pressure and a lack of strong demand zones. The FTX unlocks have flooded the market with additional supply, while weak hands have exited, further exacerbating the downward momentum.
What’s particularly concerning is the absence of any significant demand zones on Solana’s daily price chart since its dramatic fall from its $270 all-time high. This lack of support levels has left the asset vulnerable to deeper corrections, and the current market conditions suggest that the pain may not be over yet. With no clear signs of a reversal, SOL appears to be on a precarious path toward new yearly lows.
Network Activity: A Rapid Decline
Solana’s network activity has been in freefall, with transaction fees plunging to a six-month low of 53,800 SOL last week. This marks an 85% collapse from January’s peak, which was fueled by the TRUMP and MELANIA memecoin frenzy. The sharp decline in on-chain activity reflects a broader lack of interest among traders, leading to shrinking demand for SOL.
The impact of this decline extends beyond transaction fees. Solana’s Total Value Locked (TVL) has dropped significantly, falling from $14.50 billion in mid-January to just $8.15 billion. This massive liquidity exit underscores the waning confidence in the network. Additionally, active addresses have decreased by 35%, now standing at 3.8 million. With fewer users interacting on-chain and liquidity drying up, Solana’s network is struggling to maintain its relevance, further pressuring its price.
Key Levels and Liquidation Risks
The factors driving Solana’s decline align with its 55% price drop since mid-January, just days after reaching its $270 all-time high. The surge in network activity during the TRUMP and MELANIA memecoin frenzy has faded, leaving the network with weak on-chain demand and heavy sell-side liquidity.
The broader crypto market downturn has only added to Solana’s woes. With Bitcoin sliding below $80K and the market shedding over $200 billion, high-cap assets like SOL are struggling to hold key levels. Sell-side liquidity has driven $40.75 million in long liquidations, reinforcing the downside pressure.
If Bitcoin fails to reclaim critical support levels, Solana risks extending its losses toward $100–$112. This range previously acted as a strong demand zone a year ago, sparking a rebound to $180. However, given the current deterioration in network activity and the broader risk-off sentiment, a recovery to such levels seems increasingly unlikely.
The Broader Picture: A Bleak Outlook
Solana’s struggles are emblematic of the broader challenges facing the crypto market. The combination of weak on-chain demand, heavy liquidations, and continued unstaking has created a perfect storm for SOL. The lack of strong demand zones on its price chart only adds to the bearish outlook, leaving the asset exposed to further declines.
While Solana has previously demonstrated resilience, the current market conditions are markedly different. The fading network activity, declining TVL, and reduced user engagement suggest that a FOMO-driven recovery is unlikely in the near term. Unless there is a significant shift in market sentiment or a resurgence in network activity, Solana could be headed for a deeper drop, potentially testing the $100 level.
Conclusion
Solana’s recent price action highlights the challenges of navigating a bearish market environment. The cryptocurrency has lost critical support levels, with sell-side pressure dominating due to FTX unlocks and weak hands exiting. The sharp decline in network activity, coupled with heavy liquidations and a lack of demand zones, has left SOL vulnerable to further losses.
As Solana teeters on the edge of new yearly lows, the broader market sentiment will play a crucial role in determining its trajectory. Without a significant recovery in network activity or a shift in market dynamics, Solana’s path forward remains fraught with uncertainty, with the $100 level emerging as a critical area to watch.
