SOL keeps falling, will it Rebound?

Unraveling the mystery of SOL's plunge: Crisis in the face of triple adversity

At the beginning of 2025, Solana (SOL) touched a high point of $295, hoping to reshape the public chain landscape. However, just one month later, the price plummeted by nearly 40% to $181, shocking the crypto market. Its market value shrank, market confidence collapsed, and its technological advantages and position were questioned.

FTX bankruptcy liquidation brings huge hidden dangers. On March 1st, 11.2 million SOL will be unlocked, worth $20.6 billion, accounting for 2.29% of the total circulation. After the collapse of FTX in 2023, institutions such as Galaxy took over a large amount of SOL at a low price. Now with huge unrealized gains, once sold, the market will have difficulty withstanding the selling pressure. Currently, Solana's trading volume and on-chain activity are decreasing, with weak absorption capacity. 50% of its transaction fees are used for burning, but due to the decrease in activity and sharp decline in burning volume, it cannot alleviate the selling pressure. SOL may face a deeper correction.

The decline of Meme coin has triggered a crisis of trust. Solana once saw a surge in on-chain transaction volume and DEX activity, as well as price escalation, due to the Meme coin craze. However, the LIBRA incident marked a turning point, with the team behind the scenes withdrawing liquidity to arbitrage and draining $107 million, leaving investors empty-handed. While some attribute the problem to project operations, others point out the existence of a profit chain in the Solana ecosystem. Subsequently, on-chain liquidity and DEX transaction volume on Solana rapidly shrunk, prompting the market to start paying attention to whether it can break free from speculative ecology, otherwise it may repeat the mistakes of EOS.

Solana's technological advantages are no longer there. It once stood out with high throughput and low gas fees, but after the decline of meme coins, the trading volume sharply decreased, on-chain revenue decreased, the burning mechanism is difficult to offset inflation, and the imbalance between supply and demand accelerated the price decline. At the same time, the rise of Ethereum Layer2 weakened its cost advantage, challenging its core competitiveness. If it cannot find new breakthroughs or application scenarios, its position will be in jeopardy.

Technical factors, market sentiment, and regulatory pressure also bring challenges. Technically, SOL's daily chart shows a downward trend, with a dead cross in MACD, RSI below 40, breaking below the key support level of $180 or continuing to explore downward. On-chain data shows long-term holders reducing positions, slowing growth in new addresses, and a pessimistic market sentiment. Moreover, after the LIBRA incident, regulatory scrutiny has intensified, and Solana, as an active public chain for Meme coins, may face review.

Overall, the sharp drop in SOL is the result of the combined effect of multiple factors. If the issues cannot be resolved and new development directions cannot be found, the price may continue to fall, with a bleak outlook.#BTC #SOL