Solana's Value Locked Drops 45% as Selling Pressure Intensifies

Solana is currently facing significant challenges as market sentiment weakens and the number of sellers increases. The cryptocurrency has seen a drastic drop in interest, leading to a notable decrease in the total value locked (TVL) within its ecosystem. This decline has raised concerns about the future viability of Solana, as support levels crumble and investors find themselves in a precarious position.

In recent weeks, Solana’s momentum has significantly decreased, contributing to its price decline. The altcoin’s trading volume has plummeted to approximately $3 million per day, marking the lowest levels seen since September 2024. This low trading activity suggests that market participants are decisively selling their holdings, indicating a lack of buyer interest and a sharp decrease in activity. The total value locked (TVL) in Solana’s protocols has also seen a sharp decrease, falling from a high of $12.19 billion in January to approximately $6.69 billion as of recent reports. This downturn signals a shift as investors liquidate their assets amid declining confidence in SOL’s future performance.

Recent analyses suggest that Solana could face a critical support level at $100. If it fails to maintain above the next psychological threshold at $128.01, there is a potential for a market drop down to $100 or even lower. Support levels traditionally allow for price stabilization and potential rebound; however, breaking through these levels typically signifies overwhelming selling force. Failure to hold above $100.34 could lead to further declines, potentially easing to $85. Such levels have not been observed since 2024, indicating a move back into the two-digit price territory. An examination of the liquidation heat map has identified several liquidity clusters between the $120 and $114 levels, often provoking price movement in the market. Given the present downtrend, it is plausible for SOL to retreat further and establish new lows, intensifying market anxieties.

Despite the overall bearish sentiment, there are indications of bullish perspectives emerging within the derivatives market. A notable uptick in buying volume suggests that some traders are placing long bets on SOL, anticipating a rebound. Current metrics reveal a long-to-short ratio at a level slightly above 1.004, illustrating an environment where buyers are marginally outnumbering sellers, which often precedes price rebounds. Moreover, the OI-weighted funding rate, which assesses both open interest and funding rates, displays positive sentiment, registering at 0.0086%. This uptick suggests that increased long positions in the market could signal a potential rebound for Solana if the current trend persists. If the buying pressure in the derivatives market sustains and Solana manages to reclaim the critical support level around $128, we might see a much-needed turnaround. However, the risks of further decline remain palpable, making it imperative for traders to stay vigilant.

In summary, Solana is at a crossroads, battling increased selling pressure and declining liquidity. Key support levels will play a crucial role in determining the asset’s future trajectory. While bullish sentiment within the derivatives market offers a glimmer of hope, the path forward is fraught with uncertainties. Investors are advised to closely monitor the evolving situation and hedge against potential downturns.