Solana’s 40% TVL Plunge Signals Market Shift as Price Hovers at $126
Solana (SOL), once a darling of the crypto market, has experienced a dramatic downturn in recent weeks. Trading at approximately $126, SOL/USD has shed over 27% of its value in just the past week alone, leaving investors questioning whether the high-performance blockchain can recapture its former glory.
Solana’s TVL Collapse Mirrors Price Action
The total value locked (TVL) in Solana’s ecosystem has plummeted 40% in just 30 days, falling from an all-time high of $12.1 billion on January 24 to $7.4 billion currently. This represents the largest monthly drawdown since November 2022, when the FTX exchange collapsed.
This severe liquidity withdrawal has been led by major DeFi protocols within the ecosystem:
- Raydium: 53% drop in TVL
- Jito liquid staking: 41% decline
- Save Lending: 42% reduction
- Jupiter DEX: 25% decrease
The impact on on-chain activity has been equally dramatic, with weekly transaction volumes plunging from $97 billion in mid-January to just $11 billion currently. This 89% reduction in network activity suggests a substantial erosion in user engagement and ecosystem participation.
Solana Memecoin Market Implosion Accelerates SOL Price Decline
Once a main driver of network expansion, the Solana memecoin market has collapsed catastropically. From $25 billion in December 2024 to barely $8.3 billion now, total memecoin market capitalization has dropped shockingly 68% in less than three months.
Daily DEX trading volume for Solana-based memecoins has decreased precipitously from $22.1 billion on January 19 to just $1.6 billion on February 26, representing a 93% reduction. The collapse follows several high-profile memecoin scandals, including:
- The LIBRA token incident, which erased $4.4 billion in market capitalization hours after launch
- Retail investors losing approximately $2 billion across 800,000 wallets on Official Trump (TRUMP) token
- The Pump.fun X account hack promoting fake governance tokens
Historical March Performance Offers Hope
Historical study shows a possible bright future for SOL investors despite the general negative attitude. Solana has always done really brilliantly in March:
- March 2021: 49% price rise
- March 2022: 23.2% rise
- March 2024: Sixty-8% increase
This seasonal strength could coincide with currently oversold conditions to produce a significant price recovery.
SOL/USD Technical Analysis Reveals Capitulation Phase at Critical Levels
With the Relative Strength Index (RSI) falling below 30 for the first time since June 2023 Solana’s price action has entered a technical capitulation phase. Seen on the daily chart, this oversold situation usually indicates possible bottoming and reversal patterns.
Completing what seems to be a double-top pattern on technical charts, the bitcoin is trading 52% below its all-time high of $295 set on January 19, 2025. Should the crucial $135 support level fall short, this bearish formation indicates more negative risk.
Key Support and Resistance Levels for SOL/USD
As Solana navigates this challenging market period, traders should monitor several key levels:
- Critical support: $135-136 range
- Secondary support: $120-110 zone
- First major resistance: $182 area
Secondary resistance: $222 level
The deeply oversold RSI, coupled with historically strong March performance, suggests potential for a significant rebound if SOL can stabilize at current support levels.
Technical analysis from market observers suggests that “SOL could potentially sweep liquidity between the September 2024 range low at $120 and the August 2024 range low of $110”. “This would be a 22% drop from present pricing levels.”
But crypto expert Gum thinks $110 is the “minimum before a bounce,” corresponding with price ranges where institutional investors like Galaxy Digital had acquired FTX-locked SOL tokens.
Solana Price Outlook: Key Levels to Watch
Market analyst Raoul Pal has publicly stated that Solana is deeply oversold, noting that SOL is “2 standard deviations below its usual price levels on the log regression channel,” a technical condition that typically signals buying opportunities.
Additionally, potential institutional catalysts include Franklin Templeton’s filing for a Solana ETF with the US SEC. Approval could significantly boost institutional adoption and accelerate price recovery.
Improved regulatory clarity following the dismissal of the Coinbase lawsuit may provide a more favorable environment for altcoins like Solana, potentially supporting the next growth phase.
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