Solana's Price Plunge: $170 Threat Looms Amidst Memecoin Scandals

Solana (SOL) Price Rally Faces Challenges, Potential Drop Below $170 Imminent

Solana (SOL) is currently grappling with a significant downturn, with its price falling nearly 17% from recent highs above $220. Despite previous bullish momentum, SOL has struggled to break through key resistance levels, raising concerns about its future price trajectory. The token is now at risk of plunging below a crucial multi-month support level.

One of the primary factors contributing to SOL's decline is the controversy surrounding the Solana ecosystem, particularly the proliferation of scams linked to memecoins like LIBRA, Pumpfun, and Meteora. This has led to a loss of confidence among community members and negatively impacted the SOL price.

The negative sentiment surrounding memecoins has had a detrimental effect on the Solana ecosystem as a whole. The total value locked (TVL) has plummeted from highs above $12 billion to $8.9 billion, while trading volume has dropped from $35 billion to as low as $2.5 billion. Despite this, the number of transactions continues to grow.

The data from Defilama suggests that traders are uncertain about SOL's future price action. The decrease in trading volume indicates a lack of demand for the token, while the increase in transactions suggests a rise in individual trades. Additionally, open interest (OI) has fallen from $6.5B to $4.1B since SOL's price was rejected from its all-time high (ATH) at $296, further validating the uncertainty among market participants.

Solana (SOL) Price Analysis

Solana (SOL) has been one of the strongest cryptocurrencies, maintaining a robust trend for an extended period. However, the rise of memecoins on the platform has circulated bearish waves, negatively impacting the token's price. SOL has broken down from a critical support level, which does not appear to be part of a healthy ascending trend.

The chart above displays significant bearish signals for SOL's price rally. The price is on the verge of confirming a breakdown below the crucial 200-day moving average (MA) at $183.47, and the On-Balance Volume (OBV) is maintaining a descending trend, forming lower highs and lows.