As of March 27, Solana’s native token, SOL, experienced a notable decline of 4%, reflecting broader corrections within the cryptocurrency market. Currently trading at $137, SOL has struggled to maintain its position above the $140 mark. This post examines the key factors contributing to this price drop.
Recent data from Cointelegraph Markets Pro and TradingView indicates that Solana’s trajectory has been impacted by two primary factors: a decrease in network activity and a bearish technical setup.
Decreased Network Activity Influencing Price
The decline in SOL’s price has been accompanied by a significant drop in total value locked (TVL) within Solana’s DeFi applications. Key observations include:
- Since mid-January, Solana’s TVL has trended downward.
- The metric plummeted by 45.5%, decreasing from $12.1 billion to $6.4 billion over the past few months.
- This reduction coincides with a more than 53% dip in SOL’s price during the same period.
- Despite a slight rebound to $7.2 billion on March 25, the TVL is currently down 2% over the last three days.
Additionally, the trading volume on Solana’s decentralized exchanges (DEXs) has seen a notable decrease, dropping from an all-time high of $39.9 billion to a current level of just $2.3 billion.
Technical Analysis: What Lies Ahead for SOL?
Currently, SOL trades approximately 56% below its all-time high of around $295. The prevailing technical setup suggests that SOL might drop further towards the mid-$50s. Insights include:
- SOL is forming a bear flag, indicating potential continuation of the downward trend if critical support levels fail to hold.
- The bear flag emerged after SOL was rejected from the $270 resistance level, leading to a decline to $112 earlier this year.
- Should SOL break below the key support level at $132, a significant price crash could ensue.
While there are bearish sentiments surrounding SOL’s future trajectory, some analysts remain optimistic about its potential for recovery. Notably, crypto analyst Jelle suggested that while SOL has made strides from the lows of $112, it still has substantial ground to recover.
For investors and traders, understanding these dynamics is crucial as SOL grapples with market pressures. As always, we encourage conducting comprehensive research when making investment decisions.
