Is Solana's $120 Rebound a Gateway to a Larger Bullish Move?

Solana (SOL) has reached a pivotal juncture as it tests the $120 support level-a critical psychological barrier that could determine the trajectory of its short-term and long-term price action. With the cryptocurrency market in a state of flux, the interplay between technical indicators, on-chain metrics, and diverging institutional and retail sentiment offers a nuanced picture of potential reversal dynamics. This analysis explores whether the $120 support level represents a catalyst for a broader bullish resurgence or a temporary reprieve in a deeper bearish trend.

Technical Analysis: A Fragile Foundation

The $120 level has emerged as a focal point for Solana's price action, with recent data indicating bearish momentum. Lower highs and a failed attempt to settle above $132 have led to consolidation below $130, raising concerns about the sustainability of the current support zone. However, a bullish cup-and-handle pattern on the long-term chart suggests that a successful hold above $120 could trigger a rally toward $160–$174, contingent on breaking through the descending resistance trendline.

Key resistance levels remain at $134–$135 and $145, where significant SOL supply is concentrated. Technical indicators like the RSI and MACD reinforce a bearish bias, with RSI below 50 and MACD accelerating in the bearish zone according to technical analysis. A breakdown below $120 would likely target $112 or even $100–$90, while a breakout above $134 could reignite institutional buying interest. The Alpenglow upgrade, which boosted Solana's transaction throughput to 107,000 TPS, adds a layer of fundamental resilience to the network, though its impact on price remains contingent on broader market conditions.

On-Chain Metrics: Divergence and Undervaluation

Solana's on-chain activity reveals a mixed narrative. While network activity dropped 97% in Q4 2025, the NVT ratio-a valuation metric comparing market cap to transaction volume-hit a seven-month low, signaling potential undervaluation. This divergence between price and on-chain utility suggests that Solana's ecosystem fundamentals remain robust despite the 58% price decline from $300 to $120.

Active addresses on Solana increased by 5.8% in November 2025, reaching 3.65 million, indicating growing engagement despite the bearish price trend. However, the sharp drop in monthly traders-from 30 million in late 2024 to under 1 million-highlights a loss of retail momentum. Institutional interest, on the other hand, remains strong, with on-chain data showing continued accumulation and a record $8.6–$8.98 billion in DeFi TVL according to market analysis.

Sentiment Divergence: Institutional Optimism vs. Retail Caution

The contrast between institutional and retail sentiment is stark. Institutional demand for Solana-focused products, such as Bitwise's Solana Staking ETF, has surged, with assets under management surpassing $500 million. Whale activity further underscores this optimism: a $27.87 million withdrawal of 200,001 SOL from Binance in November 2025 removed significant short-term selling pressure and signaled confidence in a breakout.

Retail sentiment, however, remains bearish. The Fear & Greed Index for Solana hit an extreme fear reading of 11 in November 2025, with 91% of the market feeling bearish according to market data. This extreme negativity could act as a contrarian indicator, but it also reflects widespread uncertainty. Social sentiment scores, while positive at 84/100, are tempered by declining on-chain activity and crowded long positions according to sentiment analysis.

Strategic Implications: Entry Points and Hedging Considerations

For investors, the $120 level presents a high-risk, high-reward scenario. A successful hold above this level could validate the cup-and-handle pattern and trigger a rally toward $160–$174, particularly if institutional inflows accelerate. However, a breakdown below $120 would likely target $112 or $100–$90, with deeper support at $90–$80 if the bearish trend intensifies.

Strategic entry points for bullish positions could include a confirmed close above $120, with a stop-loss below $115 to mitigate downside risk. Conversely, hedging strategies-such as shorting above $134 or buying puts-could capitalize on the bearish bias if resistance levels fail to hold. The coming weeks will be critical in determining whether Solana can stabilize above $120 or succumb to further selling pressure.

Conclusion

Solana's $120 support level is a crossroads for both technical and sentiment-driven narratives. While on-chain metrics and institutional activity suggest undervaluation and potential for a reversal, bearish momentum and retail caution cannot be ignored. Investors must weigh the risks of a breakdown against the rewards of a breakout, using the $120 level as a dynamic reference point in a volatile market.