Solana's Critical Price Floor: Can $120 Hold to Trigger a Rebound?

Solana (SOL) has entered a pivotal phase in its price trajectory as the $120 support level emerges as a focal point for both technical analysts and market sentiment observers. With the asset testing this critical threshold in late 2025, the outcome of this price action could determine whether Solana stabilizes for a potential rebound or faces a deeper correction. This analysis synthesizes technical indicators, open interest dynamics, and ecosystem trends to evaluate the likelihood of $120 holding and its implications for short-term positioning and long-term strategy.

Technical Analysis: A Bearish Crosshair at $120

The $120 level has historically acted as a psychological and structural support for Solana, with defensive buying observed during prior corrections. However, recent price action suggests growing bearish momentum. A bearish rounded top pattern has formed, and the convergence of the 50-day and 200-day Simple Moving Averages signals an impending death cross-a classic bearish reversal indicator. If Solana closes below $120, the next key support lies at $95, with a potential breakdown scenario targeting $70–$80.

On the daily timeframe, Solana remains below critical moving averages, reinforcing the bearish bias. Conversely, the weekly chart shows a more nuanced picture: the 50-day SMA is above the price and trending upward, suggesting a potential long-term base. This divergence highlights the importance of timeframes in assessing Solana's trajectory. For now, the $120–$155 range represents a liquidity zone where reaccumulation could occur if buying momentum returns.

Sentiment and Open Interest: A Derivatives Market in Retreat

Derivatives markets reflect deepening bearish sentiment. Open interest for Solana futures has declined by 27% in recent weeks, signaling reduced leveraged exposure and a lack of conviction in short-term bullish bets. Negative funding rates further underscore this trend, as perpetual futures trade at a discount to spot prices.

Despite these bearish signals, the Relative Strength Index (RSI) has approached oversold levels, hinting at potential short-term rebounds. However, such rebounds face resistance at $140–$145, where institutional selling pressure could reemerge. The key question is whether the $120 level can act as a catalyst for a reversal or merely as a temporary floor before further declines.

TVL Trends: Ecosystem Growth vs. Market Volatility

Solana's Total Value Locked (TVL) has surged to $35 billion in 2025, up from $3 billion in December 2023, driven by stablecoins and institutional staking activity. This growth underscores the network's appeal as a high-performance blockchain for DeFi and on-chain activity. However, late 2025 has seen a 32% decline in TVL from its September peak, reflecting reduced liquidity and capital inflows.

Protocol-specific breakdowns reveal uneven performance: Jupiter, Raydium, and Jito have all experienced double-digit TVL declines, while institutional staking remains a bright spot. This divergence suggests that while the ecosystem's fundamentals are robust, market volatility and macroeconomic factors continue to weigh on user activity.

Strategic Positioning: Short-Term Caution, Long-Term Potential

For short-term traders, the $120 level represents a high-risk, high-reward scenario. A breakdown below this threshold could trigger a bear flag pattern, projecting a target of $99 if the $140 support fails. Conversely, a sustained close above $155.83 could rekindle bullish momentum, with $220 as a near-term resistance target.

Long-term investors, however, may view the current correction as an opportunity. Solana's ecosystem fundamentals-improved infrastructure, growing DeFi adoption, and institutional interest-remain intact. ETF inflows, including a $336 million weekly surge, highlight continued confidence in the asset's long-term potential. Analysts project a bullish case of $357.32 by 2025, contingent on macroeconomic stability and regulatory clarity.

Conclusion: A Make-or-Break Moment for Solana

The $120 support level is more than a technical threshold-it is a litmus test for Solana's resilience in a volatile market. While bearish indicators like the death cross and declining open interest suggest a high probability of further downside, the ecosystem's fundamentals and institutional adoption provide a counterbalance. Investors must weigh the immediate risks of a breakdown against the long-term potential of a stabilized recovery. For now, the market's focus remains on whether $120 can hold-or if history will repeat itself with a deeper correction.