Solana’s digital asset, known as SOL, experienced a sizable 15.56% decline in a single day due to market pressures driven by tariffs, causing it to drop below its levels before the recent election and breaking through the crucial support level of $150. Notably, SOL has been leading the downturn among high-cap cryptocurrencies, with a weekly decrease of nearly 20%.
Additionally, the on-chain transfer volume for SOL plummeted to $14.5 million, indicating a remarkable 99% decline from its peak of $2 billion in November.
Given the cooling on-chain metrics, investors wonder whether SOL is heading towards a deeper correction or if buyers will intervene to protect vital support levels.
The Crucial Moment for Solana’s Trading Volume
Preserving essential support levels is now more critical than ever for SOL. With all gains made post-election wiped out, the risks have never been higher.
Since reaching its peak of $295.83 following the surge fueled by the TRUMP memecoin, Solana has struggled to establish a strong support base, leaving it vulnerable to significant downside risks.
Furthermore, crypto analyst Ali Martinez pointed out a significant reduction in Solana’s volume metrics, further destabilizing its price outlook.
Currently trading at $139.70, SOL is at a pivotal juncture. Successfully converting this level into support is vital for restoring market trust.
A failure to do so might compel long-term holders (LTHs) to give in, especially as Solana has already lost almost $40 billion in market capitalization just this month.
While the volume data for Solana doesn’t immediately indicate a supply shortage, there remains an excess of liquidity, with around $1 billion in Total Value Locked (TVL) vanishing, making a sustained recovery appear challenging in the short run.
Future Prospects for Solana
In previous cycles, bullish investors have hesitated to intervene during market downturns, leading to a continual pullback in SOL. This has likely cleared out weak investors, setting the stage for a potential new cycle peak.
The on-chain volume metrics for Solana are reinforcing this perspective, showing a surge to $5.28 billion.
However, additional confirmation is necessary in the upcoming days to establish a lasting trend reversal. If the buying momentum weakens, the 99% drop in Solana’s transfer volume, coupled with feeble bullish support, could steer this development towards a short-term profit-taking phase rather than a prolonged accumulation period.
To witness a substantial recovery, robust accumulation is crucial to trigger a supply shortage and absorb excess market liquidity.
Monitoring Solana’s volume metrics will be vital for confirming any potential trend reversal in the days ahead.