Solana Plummets 40% in a Month, Faces 50% Correction Risk

Solana (SOL) has experienced a significant decline over the past month, with its price retracing nearly 40% and losing key support levels since February. This downturn has raised concerns among analysts about a potential 50% correction to a yearly low.

Solana, which has been one of the leading cryptocurrencies in the recent cycle, saw a remarkable surge of over 270% in a year, reaching an all-time high (ATH) of $270 nearly two months ago. However, the bullish sentiment surrounding SOL has waned significantly since January, leading to a drop of over 50% from its January 19 ATH.

At the start of last month, Solana lost the crucial $200-$220 support zone, and subsequent market crashes sent its price to retest the next key levels. After losing the $180 mark two weeks ago, SOL's price fluctuated between the $130-$150 range, briefly surging to the $179 mark at the start of March. This week's market correction, which saw Bitcoin (BTC) drop to $76,000 for the first time in four months, has pushed Solana to new monthly lows.

On Tuesday, SOL's price briefly dropped to $111, a level not seen since the August 2024 market crash, before bouncing back to $125. Pseudonym trader Crypto Busy warned that SOL must "hold this crucial support to maintain a bullish sentiment above $100."

Crypto analyst Ali Martinez previously noted that the most crucial zone for Solana appears to be between $110 and $125, as this horizontal level served as a key support during its 2021 and 2024 rallies. Martinez suggested that holding above this range could be key for the next move. However, Martinez also pointed out that Solana could be on the verge of a breakdown, as it has broken below its key level. According to the post, SOL risks a 50% crash to the $60 mark if it fails to hold the $125 support zone.

The analyst highlighted that the cryptocurrency has been forming a right angle ascending broadening pattern since March 2024, when it first reclaimed the level during this cycle. During this period, every higher high on Solana’s chart has created a rising trendline at the top of the pattern, while the $125 support has held “as a strong horizontal support trendline.” However, SOL’s break below this horizontal zone has increased the odds of a 50% price correction to the Q4 2023 levels.

Additionally, Martinez recently warned of a potential correction based on Solana’s trading pair against Bitcoin, which started to resemble ETH/BTC’s chart. The analyst suggested that the SOL/BTC chart was looking like Ethereum’s trading pair against BTC’s past price action, adding that if it continued to follow this pattern, the SOL/BTC chart could see a drop to the 0.0008 region. After the recent price action, the trading pair hit a 15-month low of 0.0014624 on Tuesday.

As of the latest update, Solana trades at $124, reflecting a 14% decline in the weekly timeframe. The current market conditions and technical analysis suggest that Solana is at a critical juncture, with the potential for a significant price correction if it fails to hold key support levels. Investors and traders are closely monitoring the situation, as the outcome could have substantial implications for the cryptocurrency's future performance.