Solana sustains the downtrend, with on-chain data suggesting increased selling pressure dragging this altcoin to $140.
Solana continues to surrender gains realized in 2024 Q4 at a time when a marketwide plunge tests the digital assets. The 38% percent slip has seen the SOL revisit the price range witnessed in October 2024.
A look into the on-chain data shows Solana confronts rising selling pressure, coincidentally as it encounters a sharp drop in the DEX and transfer volumes.
Solana Plunges Further
While Solana staged a rare 4.5% recovery in the past 24 hours, it is still down 17% in its seven-day run. The SOL has surrendered 40% of its market cap to currently sit at $70.4 billion. The loss in the SOL value raises concerns about an extended downtrend.
Market chartist Ali Martinez reports that on-chain data signals an increased state of fear among investors, with the net unrealized profit/loss metric showing increased selling pressure. Additionally, the analyst observed a sharp reduction in Solana’s transfer volume, which was $14.6 million, from $1.99 billion in November last year.
Furthermore, the decentralized exchange (DEX) volumes have tumbled further by 30% in the past seven days, testing the lowest level witnessed in October 2024. The SOL Futures Open Interest has halved from $8.5 billion on Jan 19 to $4.1 billion on Feb 27, per CoinGlass data. The decline portrays reduced trader confidence.
Market analysts attribute the downtrend to the fading hype of meme coins following the controversial LIBRA pump-and-dump scheme that features Argentina President Javier Milei. The president faces a fraud investigation for allegedly promoting a deceptive crypto project that vaporized billions in value as it collapsed within hours of launch.
The fading meme coin hype coincides with the capital inflows into the SOL-based tokens turning negative. Glassnode data suggests the absence of fresh liquidity.
Reasons for Decline
The decline in Solana coincides with Bitcoin dipping below $88,000, with analysts attributing the freefall to several macroeconomic factors.
The steep fall is linked to President Donald’s announcement of the 25% tariff targeting imports from Mexico and Canada. This is heightening inflationary fears, thus aggravating volatility in the crypto market.
The market-wide decline is inevitable as the sector processes the Bybit $1.5 billion exploit. The attack on the crypto exchange is linked to the Lazarus Group, sponsored by the state of North Korea. The scale of the exploit of the cold assets has taken a toll on investor confidence in the digital assets sector.
The market sentiments around the SOL ecosystem appear shaken by the news of the now-defunct crypto exchange FTX plans to unlock 11 million SOL, which is estimated at $2 billion in March. This adds to the pressure from the meme coin fiasco, with reports of insider trading and collaborations aimed at defrauding inventors, which heightens the negative bias.
SOL Price Trajectory
The Solana price chart per the Moving Average Convergence Divergence (MACD) metric illustrates a deepening bearish crossover. The MACD formations align with the histogram that sustains the red bars to suggest increasing downward momentum and prolonged selloffs in the absence of a strong bullish catalyst emerging.
Additionally, the Relative Strength Index (RSI) of this altcoin sits at 33.02, implying it is within the oversold territory. This implies that the SOL selling pressure has hit extreme levels. Nonetheless, traders should exercise caution as RSI could be stuck within the oversold territory for extended spell during the strong downtrends.
Crypto analyst Martinez considers the right-angled ascending and broadening formation to be noticeable within the SOL’s 3-day chart. The present price is within this formation, approaching the crucial support at $130. The analyst notes that failure by the bulls to defend the $130 level could trigger a further downtrend towards $65.
Analysts warn that SOL could struggle further to reclaim the lost ground if it fails to encounter a bullish catalyst to trigger buying volumes. The situation makes it possible for a further drop to a $120 price point.
