Solana (SOL) Price Dip: Market Correction or Deeper Issues?
Solana's native token, SOL, experienced a 4% price drop, mirroring minor corrections across the broader cryptocurrency market. Trading at $137, SOL failed to maintain its position above $140 on March 27.
Decreasing Network Activity Impacts SOL Price
The recent SOL price decline follows a decrease in Total Value Locked (TVL) within Solana's decentralized finance (DeFi) applications.
- Solana's TVL has trended downward since mid-January, falling 45.5% from $12.1 billion on January 19 to a four-month low of $6.4 billion on March 11.
- This TVL drop correlates with SOL's price decrease, which is down more than 53% during the same period.
- While the TVL saw a slight recovery to $7.2 billion on March 25, it has since dropped 2% in the last three days.
- The March 27 SOL price drop also coincided with a sharp decrease in Solana's decentralized exchange (DEX) activity. Trading volume plummeted from an all-time high of $39.9 billion on January 19 to $2.3 billion currently.
Reduced TVL and DEX trading volume decrease demand for SOL, contributing to the price decline.
Could SOL Drop to $55?
Currently trading 56% below its all-time high of approximately $295 (January 19), technical analysis suggests SOL might fall further, potentially towards the mid-$50s.
- SOL is currently within a bear flag pattern, suggesting continued downward momentum if key support levels fail.
- This bear flag formed after SOL's rejection from the $270 resistance and subsequent drop to a 12-month low of $112 (January 19 - March 11).
- The bear flag's downside target, based on the height of the previous drop, is approximately $55, representing a 60% decline from the current price.
While some analysts remain optimistic about Solana's long-term prospects, the current technical indicators present a cautious outlook. At Codeum, we provide expert smart contract audits, KYC verification, and custom smart contract development to help blockchain projects mitigate risks and ensure security. Contact us today for a consultation.
Disclaimer: This article does not provide investment advice. Conduct thorough research before making any investment decisions.