Solana experiences significant decline, hitting its lowest price since November amid mounting selling pressure ahead of a major token unlock.
As of the latest update, Solana (SOL) is priced at $135, reflecting a steep 15% drop within a single day. Over the past week and month, the cryptocurrency has seen declines of 17% and 56%, respectively.
This latest downturn marks Solana’s lowest price since mid-October. Despite increasing institutional interest in SOL, as asset managers have recently filed for Solana exchange-traded funds, the price continues to fall.
Several factors contribute to Solana’s price decline, primarily the overall market sell-off, which has resulted in over $325 billion lost from the cryptocurrency market since Friday. While Bitcoin’s decline has been relatively minor, altcoins like Solana have experienced more substantial losses, ranking among the hardest hit within the top 10 cryptocurrencies by market capitalization.
The sell-off in the broader market is exacerbated by a decline in demand for meme coins, particularly following the recent Libra scandal, which had previously boosted Solana’s activity.
Looking forward, the forecast for Solana’s price appears bearish. Recently, over $38 million worth of SOL was withdrawn from exchanges by major crypto market maker Wintermute. This comes just before an anticipated $2 billion SOL token unlock event scheduled for March 1, releasing more than 11.2 million SOL tokens into circulation. The withdrawal suggests that Wintermute may be preparing for potential further price pressure on Solana resulting from the unlock.
According to recent reports, in the upcoming three months, over 15 million SOL—valued around $2.5 billion—will be introduced into circulation, much of which was acquired at $64 per SOL during FTX’s auctions. Concerns arise that companies such as Galaxy Digital and Pantera Capital may opt to sell their allocations, given the deteriorating market sentiment.
Technically, Solana is in a significant downtrend, trading well below its 50-day (196.38) and 200-day (198.63) Weighted Moving Averages. A death cross is emerging as the 50-day WMA crosses below the 200-day WMA, indicating a likelihood of additional price declines.
For structural levels, key support is noted between $130 and $140, with a potential dip to $120 if it fails to hold. Resistance levels are identified between $160 and $180, consistent with previous consolidation zones.
In conclusion, Solana’s sharp decline is largely attributed to the impending token unlock event, which will introduce over 11.2 million SOL into the market. As Wintermute announces significant withdrawals, the selling pressure continues to build. However, the aggressive sell-off has moved SOL into oversold territory, suggesting a potential for a short-term relief bounce. Should sellers lose momentum and buyers begin stepping in at critical support levels, a temporary recovery could be on the horizon. For any sustained recovery, reclaiming resistance above $160 will be essential to shift market sentiment positively.
