Solana (SOL ($172.47)) has plunged 42% from its January peak of $295, as the meme coin frenzy that once fueled its rise has now led to a sharp decline. Many meme coins launched on Solana had little real utility, resulting in speculative pump-and-dump schemes that ultimately hurt retail investors.
How the Meme Coin Craze Crashed SOL’s Price
The fading hype around meme coins has directly impacted Solana’s price. Coins like MELANIA and LIBRA contributed to market instability, triggering large-scale liquidations and adding to SOL’s volatility. As speculative trading cooled off, SOL’s value continued to drop.
Token Unlock Raises Supply Concerns
A major March 1 token unlock is also weighing on Solana’s price. With 11.2 million SOL set to enter circulation, investors worry about oversupply. Historically, large token unlocks increase selling pressure, leading to further price declines.
Falling On-Chain Activity Weakens Solana’s Market Position
Solana’s network activity has collapsed in recent months. Active users dropped 55%, from 18.5 million in November to just 8.4 million, while transaction volume plummeted from $2 billion to $26 million. A shrinking user base and lower transaction volumes suggest weakening demand, putting downward pressure on SOL’s price.
Market Sentiment: Will Investors Hold or Sell?
Long-term SOL holders are showing signs of anxiety, according to Glassnode. Increased caution and uncertainty could either lead to a continued breakdown or set the stage for a reversal.
However, Santiment points out that SOL’s drop to $161, its lowest in three months, might present a contrarian buying opportunity. When market sentiment is extremely negative, a rebound often follows.
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Whale Activity Signals Confidence in Solana’s Future
Despite the recent downturn, whales remain bullish. A new wallet recently staked 87,328 SOL (worth $14.8 million) from Binance, suggesting that large investors still believe in Solana’s long-term potential.
Technical Outlook: Can Solana Recover?
Solana trades around $170, with only a slight 0.30% gain. Its market cap is $82.8 billion, and its trading volume is $5.15 billion.
SOL’s price chart shows a declining channel marked by lower highs and lower lows. The critical support level is $160. If SOL holds this support and breaks above $185, it could trigger a short-term rally.
However, failure to clear resistance might lead to another drop, with prices potentially retesting the $155-$160 range before any breakout.
Solana Price Prediction: What’s Next for SOL?
If Solana maintains support at $160 and pushes past $185, it could aim for $200 in the short term. However, token unlocks and declining on-chain activity pose risks. Traders should stay cautious and use stop losses to manage risk.
Final Thoughts
Solana faces major challenges, but the extreme bearish sentiment and strong whale accumulation could signal a turning point. A breakout above $185 could begin a recovery, but investors should stay vigilant in this volatile market.
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