Solana Faces 30% Drop Risk as Bearish Pressure Intensifies

Solana, the sixth-largest cryptocurrency by market cap, is currently experiencing a downward trend due to bearish price action. At the time of writing, SOL was trading around $108.50, having surged by over 10% from $97 within 24 hours. This rise in price highlights greater participation from traders and investors compared to the previous day.

According to technical analysis, on April 6, 2025, SOL broke below its key horizontal support level of $114 for the first time since March 2024. Historically, this level has acted as a point of price reversal or rebound, but this time, the pattern has failed. Following the breakdown, SOL’s daily candle closing below $114 suggests the asset is likely to continue crashing. If SOL remains below $114, historical patterns suggest a potential 30% drop, which could lead to the next support level at $77. At press time, SOL traded below the 200-day Exponential Moving Average (EMA) on the daily chart, indicating a strong downtrend with continued downward momentum. In such conditions, traders and investors often seek shorting opportunities. Other technical indicators, like the Relative Strength Index (RSI), were near oversold levels, reflecting ongoing bearish sentiment and highlighting dominant selling pressure in the market.

Given the bearish market sentiment and high volatility of the asset, traders appear to be strongly betting on the bearish side despite recent gains. The SOL Long/Short Ratio stood at 0.95, indicating that traders are holding slightly more short positions than long positions in the market, a bearish signal. Traders were over-leveraged at $108.50 on the lower side (support), where they have built $23.20 million worth of long positions. Meanwhile, $113.10 is another over-leveraged level on the upper side (resistance), where they have built $85 million worth of short positions, clearly indicating traders’ bearish outlook. When combining these on-chain metrics with technical analysis, it appears that bears are currently dominating the asset. However, these short and long positions are likely to be liquidated once the price moves significantly in either direction.

Solana is currently facing significant bearish pressure, with analysts warning of a potential 30% drop in its value. The daily chart indicates that if Solana (SOL) remains below the $114 level, it could plummet towards $77. This bearish outlook is supported by various technical indicators and market sentiment analysis. Initially, SOL is likely to drop to the $90–100 range. However, if panic selling sets in, the next target could be $80, marking a 30% decline from the $115 level. Key risk factors contributing to this potential drop include a spike in Bitcoin dominance and margin trading activities.

The broader market downturn, exacerbated by macroeconomic fears and a significant increase in crypto liquidations, has also impacted Solana. The market has seen a decline of over 30% from its peak in December, with Bitcoin sliding below $77,000. This market turmoil has led to a 16.27% loss in SOL's value, bringing it down to $100.32. Over the past year, Solana has experienced a more than 40% drop in value due to sustained bearish pressure.

Historically, the crypto market has shown a pattern of cyclical behavior, with major pullbacks preceding significant bull runs. The downturn in February 2025, following a positive turnaround in the fourth quarter of 2024, is reminiscent of previous cycles in 2017 and 2021. During these periods, the market experienced substantial declines before entering a massive bull run. This historical context suggests that the current downturn could be a temporary setback rather than a long-term trend.

In response to the market crash, investors are advised to reassess their portfolios and shift focus towards low-risk assets that offer stability. During the 2018 market collapse, many investors reallocated their funds from high-risk altcoins to established cryptocurrencies like Bitcoin and Ethereum, which helped mitigate their losses. By reducing holdings in volatile cryptocurrencies, investors can protect their portfolios during market corrections. Assets with weak fundamentals are likely to suffer sharp declines, while projects with strong use cases and development teams can enhance portfolio resilience.

Analyzing undervalued cryptocurrencies during a market crash can also present buying opportunities. Cryptocurrencies with strong use cases and technological advancements may offer high returns once the market stabilizes. For example, during the 2020 market crash, some investors purchased Ethereum at a low price, benefiting from its subsequent rise as the DeFi ecosystem gained traction.

Understanding market psychology is crucial during a downturn. Sometimes, the best course of action is to observe the market and make informed decisions based on its response. Prices may recover after initial panic selling, allowing investors to avoid unnecessary losses. Monitoring the market and studying its behavior can help investors prepare for future fluctuations.

Adjusting with the capitulation phase involves making rational investment decisions based on predefined criteria rather than out of anxiety. Setting stop-loss orders or defining maximum acceptable losses can help manage portfolios during market volatility. However, leveraging during a market downturn is not advisable, as it can lead to rapid and substantial losses. Focusing on unleveraged or minimally leveraged investments allows investors to preserve capital during volatile periods.

In conclusion, the current bearish pressure on Solana and the broader crypto market requires investors to exercise patience and strategic decision-making. Selling crypto assets during a market collapse can lead to significant losses, while adjusting portfolios, identifying new buying opportunities, and observing market conditions can help investors navigate the situation effectively. Implementing proper risk management strategies, such as limiting exposure to risky crypto assets and setting stop-loss orders, can also protect investments during market volatility.