Solana's SOL Faces 12% Drop Risk as On-Chain Activity Declines 49%

Solana’s native token, SOL, has been facing significant resistance at the $150 price level for the past three weeks. The cryptocurrency experienced an 8% rejection after briefly touching $147 on March 25, indicating a persistent struggle to reclaim higher price points. This resistance comes amid declining on-chain activity for the Solana network, raising questions about the sustainability of the bull market that was fueled by memecoin speculation and the artificial intelligence sector.

The decline in on-chain activity is evident in the drop in Solana’s DApp revenues, which have fallen from $23.7 million to $12 million in just two weeks. Similarly, chain fees have decreased from $6.6 million to $3.6 million during the same period. This decline in revenue and fees suggests a waning interest in the Solana ecosystem, which could further pressure SOL’s price.

Technical analysis shows that SOL has formed a bearish falling wedge pattern, which could lead to a 12% drop to $120 if it breaks below the $136 support level. The bearish outlook is further supported by the TD Sequential indicator, which is showing a sell signal. Despite these bearish indicators, intraday traders are heavily positioned on the long side with $167 million in long positions, indicating a bullish sentiment among short-term traders.

Solana’s dominance in the decentralized exchange (DEX) volumes has also been challenged. Despite having 34% more total value locked (TVL) than BNB Chain, Solana has lost its position as the dominant network in DEX volumes. This shift in market dynamics adds to the pressure on SOL’s price, as investors may be reallocating their funds to more competitive blockchains.

Despite the bearish indicators and declining on-chain activity, some market watchers remain optimistic about Solana’s future. Potential catalysts for SOL’s price include a spot exchange-traded fund (ETF) approval in the United States and the expansion of tokenized real-world assets on the Solana network. Nikita Bier, co-founder of TBH and Gas startups, believes that Solana has the fundamental building blocks for a breakthrough in the mobile sector, citing the network’s streamlined onboarding experience for mobile users as a key advantage.

However, the recent decline in on-chain activity and the loss of dominance in DEX volumes suggest that Solana may face an uphill battle in regaining its previous market position. The bearish technical indicators and the potential for a further price drop to $120 add to the challenges that SOL must overcome. Nevertheless, the bullish sentiment among intraday traders and the potential for future developments in the Solana ecosystem provide some hope for a price recovery in the coming months.