Solana (SOL) faces pressure from DeFi weakness and low activity
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Solana’s price has dropped 6.5% in the past 24 hours, trading near $127, reflecting broad-based losses across the cryptocurrency market. Several factors have contributed to this decline, including weakening investor confidence in Solana’s DeFi ecosystem, declining open interest (OI) in futures markets, and technical indicators signaling further downside risks.
Solana’s Total Value Locked (TVL) in DeFi protocols has fallen 45.5% from its peak of $12.1 billion in January to $7 billion, indicating that investors are pulling liquidity from the ecosystem. Major Solana-based protocols such as Jito and Raydium have seen TVL declines of 30% and 32%, respectively, suggesting diminished user activity and capital outflows. At the same time, on-chain transaction volume has plummeted from an all-time high of 71,738 transactions on Jan. 23 to just 24,505 on March 17, highlighting a sharp decline in network usage and, consequently, lower transaction fee revenues.
Futures market sentiment is also bearish, with Solana’s OI dropping from $8.57 billion in January to $4.03 billion, signaling that speculators are closing positions. Funding rates remain negative (-0.10%), meaning short sellers are paying to keep their positions open, further reflecting lackluster confidence in short-term price action.
From a technical standpoint, SOL remains vulnerable if it fails to hold the $120 support level. A break below this level could trigger a decline to $110, and further downside risks could extend losses to $100 and $80, representing a potential 35% correction from current levels. On the upside, a break above the $140 resistance level could trigger a move toward the 50-day SMA at $171, where strong selling pressure is expected.
Overall, Solana’s current weakness is driven by fundamental and technical factors, with declining DeFi engagement and network activity raising concerns about long-term growth. Traders should monitor liquidity flows, funding rates, and key support levels to gauge the next directional move in SOL.
Solana’s Total Value Locked (TVL) in DeFi protocols has fallen 45.5% from its peak of $12.1 billion in January to $7 billion, indicating that investors are pulling liquidity from the ecosystem. Major Solana-based protocols such as Jito and Raydium have seen TVL declines of 30% and 32%, respectively, suggesting diminished user activity and capital outflows. At the same time, on-chain transaction volume has plummeted from an all-time high of 71,738 transactions on Jan. 23 to just 24,505 on March 17, highlighting a sharp decline in network usage and, consequently, lower transaction fee revenues.
Futures market sentiment is also bearish, with Solana’s OI dropping from $8.57 billion in January to $4.03 billion, signaling that speculators are closing positions. Funding rates remain negative (-0.10%), meaning short sellers are paying to keep their positions open, further reflecting lackluster confidence in short-term price action.
From a technical standpoint, SOL remains vulnerable if it fails to hold the $120 support level. A break below this level could trigger a decline to $110, and further downside risks could extend losses to $100 and $80, representing a potential 35% correction from current levels. On the upside, a break above the $140 resistance level could trigger a move toward the 50-day SMA at $171, where strong selling pressure is expected.
Overall, Solana’s current weakness is driven by fundamental and technical factors, with declining DeFi engagement and network activity raising concerns about long-term growth. Traders should monitor liquidity flows, funding rates, and key support levels to gauge the next directional move in SOL.