Will Solana Recover From Its 3-Month Low? What’s Next for SOL?

Solana Coin News: LIBRA Coin Crash Sparks SOL Selloff—What's Next?

Solana's Price Plunge: What happened?

Solana (SOL) has dropped almost 42% following a January all-time high of $295. Once driving its explosive rise, the meme coin bubble burst and this precipitous drop ensued. Many meme currencies struck on Solana had little use, which resulted in pump-and-dump tactics detrimental to retail investors.

Meme Coin Craze's Effects on Market Sentiment

Solana's price suffered directly from the waning enthusiasm around meme currencies. Popular coins like MELANIA and LIBRA added to the volatility of the network and caused notable liquidations. Unstable market conditions brought on by this speculative frenzy drove SOL down.

Token Unlock and Supply Issues

The approaching March 1 token unlocking adds still another unfavorable influence. The 11.2 million SOL increase in Solana's circulation supply raises questions about oversupplying. Historically, when more tokens flood the market, token unlocks lead to price declines.

Reducing on-chain activity weakens SOLV

On-chain activities of Solana have likewise collapsed. From 18.5 million in November to merely 8.4 million—a 55% reduction—the active users of the network plummeted. From $2 billion to $26 million, transaction volume dropped very drastically. Often a symptom of declining demand, reduced network activity causes prices to be pressured down.

Investor Opinion and Market Action

Long-term SOL holders are showing symptoms of anxiety, claims Glassnode. Often before significant price swings are more caution and market uncertainty. The present bearish attitude might either cause a breakdown or provide conditions for a reversal.

According to Santiment, SOL lately dropped to $161, a 3-month low. An extreme negative attitude might occasionally point to a possible rebound since markets often move against public expectations. For risk-tolerant traders, this can offer a contrarian buy signal.

Whale Activity Signals Extended Belief

Not insignificantly, a new wallet staked 87,328 SOL (valued $14.8 million) from Binance. Such whale action shows hope in Solana's long-term possibilities despite transient price fluctuations.

Solana Technical Analysis: Exists a Rebound Potential?

Currently trading at about $170, the altcoin shows a meager 0.30% rise. Its market capitalization is over $82.8 million and trade volume is $5.15 billion.

The price action of Solana reveals a declining channel with reduced highs and lows. The crucial support level comes at $160. A positive turnaround might start if SOL gains this backing and breaks above the declining trendline at $185.

Failure to break resistance, however, might cause another decline as prices might retest the $155-$160 zone before any breakout.

Solana Price Forecasting: Future Direction

Solana can aim short-term at $200 if it keeps its $160 support and breaks above $185. Still, the token unlocks and diminishing on-chain activity create dangers. To control their risk, traders should approach carefully and apply stop losses.

Eventually

Although Solana has great difficulties, an excessive bearish attitude and high whale activity could indicate a turning phase. A breakout above $185 might initiate a positive cycle, but in this erratic market, investors should be alert.