Solana’s price has come under pressure over the past two months amid growing concerns about its ecosystem.
Solana (SOL) has dropped from its year-to-date high of $295.52 to a low of $112 this week, wiping out $71 billion in market value as its market cap plunged from $139 billion to $68 billion.
Solana’s crash was because of the ongoing crypto crash that has brought the total market cap of the whole industry to $2.8 trillion.
The price drop has also been fueled by rising concerns about Solana’s ecosystem, which has become increasingly linked to meme coins. The market cap of all Solana meme coins tracked by CoinGecko has fallen from over $25 billion earlier this year to $7.7 billion. A key concern is that many of these meme coins have turned out to be rug-pull scams.
Another factor weighing on Solana’s price is a large token unlock that took place earlier this month, tied to recent FTX distributions. A token unlock introduces more tokens into circulation, leading to potential dilution and downward pressure on price.
Solana has also lost its market share in the DEX industry to Ethereum (ETH). According to DeFi Llama, the total volume handled by DEX protocols in the network in the last 30 days stood at $76.95 billion, lower than Ethereum’s $84 billion.
Solana price technical analysis
On the positive side, signs suggest that Solana could stage a strong comeback once the current crypto crash eases.
The weekly chart shows that the accumulation and distribution indicator has continued rising over the past few months, signaling that investors have been accumulating SOL during the downturn.
Most importantly, Solana has been forming a cup-and-handle pattern, a bullish formation characterized by a rounded bottom, a horizontal resistance line, and a pullback.
In Solana’s case, the horizontal line connects the highest levels from 2021 and 2024. The ongoing retreat represents the formation of the handle section. If Solana holds above $100, there’s a strong likelihood that it could stage a rally.
The cup has a depth of about 95%. Measuring that same distance from the top of the cup suggests an eventual surge to $505, implying a 270% increase from current levels.
The key caveat is that cup-and-handle patterns take time to complete, meaning that the 270% surge could take months or even years. For example, it took three years for the cup section to form.
