Will Solana fall another 95%? Why SOL’s bottom looks far away

The real-world asset ecosystem on Solana [SOL] surged to a historic milestone of $1.66 billion in tokenized value recently.

The steady growth in RWA reflected capital moving on-chain and increased institutional participation in Solana’s settlement infrastructure.

AMBCrypto also reported that the Layer 1 blockchain was one of the leading competitors in dApp revenue. Combined with spot ETF inflows and high network activity, it seemed that the Solana fundamentals were strong.

Even in risk-off market conditions, the network saw a leap in app revenue capture ratio from 262% to 375%. An increasing RWA base and whale accumulation have not been enough to halt SOL’s downward march.

The long-term descending channel remained unbroken. The weekly chart showed why further losses were likely.

There were sizeable imbalances up to $140, which could be filled before the $47.9 southward extension level is tested as support.

The trend was too strongly bearish to be overcome anytime soon. Crypto analyst Ali Martinez posted the monthly chart of SOL on X. On it, the monthly SuperTrend indicator had flipped to a “sell” signal.

The last time this happened was in 2022, and SOL faced a 95% price drop afterward.

Accumulation is too weak to stave off SOL bears

The Hodler net position change turned green in January. This meant that the monthly position change of long-term SOL holders had been increasing, a sign of accumulation.

However, the metric has slowed down over the past three weeks.

The slowdown came alongside a SOL slide below the $100 level. It reflected weakened long-term conviction from long-term holders compared to the first half of January.

There could be more pain ahead, and the trepidation from holders might be justified. The percent of addresses in profit was at lows not seen since November 2023, hovering around 20% in February.

During the previous bear cycle, the percent of addresses in profit had dropped to 1.37% on the 28th of December, 2022.

History need not repeat exactly, but long-term investors can wait a few more months before buying SOL. The market-wide sentiment remained bearish, and it was too early to call the bottom.

Final Summary

• The Solana fundamentals remained strong, and institutional confidence in the network has not flagged.
• The cyclical nature of the market has thrown SOL deep into a bear market, and there could be more drawdown ahead later this year.