Amid the market retrace, Solana (SOL) has experienced a significant correction that has pulled its price down to a five-month low. Analysts warn that if SOL fails to reclaim its key support levels, the altcoin may face further declines.
Solana Sentiment Plummets to Yearly Low
On Monday afternoon, the crypto market continued its weekend decline after failing to hold essential support levels. In the last 24 hours, most cryptocurrencies have dropped to monthly lows amid the latest market correction.
Bitcoin, the largest cryptocurrency by market capitalization, fell from the $96,000 mark into the range lows of its post-elections range, losing the $90,000 support for the first time since November.
As Bitcoin struggled, Solana, one of the prominent altcoins of this cycle, mirrored BTC’s trajectory. SOL plummeted 12% from the $150 support, sinking to the $140 level before reaching $131 on Tuesday morning, its lowest price since September.
Analyst Miles Deutscher noted that Solana’s sentiment has dropped to its lowest level in over a year. The sentiment around SOL has not been this diminished since the cryptocurrency first reclaimed the $100 mark at the beginning of 2024.
Market sentiment has notably shifted over the past few weeks, with many community members expressing exhaustion over the increasing instances of Solana-based memecoin scams.
Following the fallout from the Libra token crash, which saw over $100 million taken from investors, the market began to see capital rotation from Solana to Ethereum. Subsequently, SOL’s price dropped 12%, losing the $180 support zone and failing to reclaim it for an entire week.
Deutscher remarked that Solana is experiencing its “capitulation moment” after a strong performance last year, hinting that this capitulation could signal a potential rebound.
Could Another 50% Drop Be Imminent?
Crypto analyst Jelle pointed out that Solana has undergone a 50% drop from its January highs and has retraced to a crucial weekly level. The $130 and $140 zone has historically been a key support level during the 2021 all-time high (ATH) breakout and the subsequent 2024 rally.
Jelle suggested that maintaining this area will be critical for Solana’s performance, as an upcoming token unlock, slated for March 1st, will have significant implications for its price.
Ali Martinez commented on SOL’s recent trading patterns, noting that SOL’s trading pair against BTC resembles that of ETH/BTC. According to Martinez, the SOL/BTC chart is beginning to mimic Ethereum’s trading dynamics against BTC in the past.
If this pattern persists, SOL/BTC could be on track for a 50% drop to 0.0008, potentially lowering Solana’s price to the $70 region.
In contrast, Altcoin Sherpa views the $90-$125 range as a “promising zone” for purchasing, asserting that Solana is not “dead.” He believes SOL will likely bounce back from its lows but anticipates volatility.
As of this writing, SOL is trading at $141.36, reflecting a 45% decrease within the monthly timeframe.
