Solana (SOL) has experienced a 6.5% decline over the past 24 hours, bringing its value down to approximately $127 as of March 17, reflecting a broader downturn in the cryptocurrency market.
SOL/USD daily chart.
The leading factors contributing to the drop in SOL prices today are:
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Reduced interest from investors in SOL’s decentralized finance (DeFi) sector.
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Decreasing open interest and unfavorable funding rates.
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Technical indicators hint at a potential further decline in the SOL price.
Solana TVL reaches four-month lows
The recent decline in SOL’s price follows a drop in the total value locked (TVL) in its DeFi applications, according to data analysis.
Key observations include:
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Solana’s TVL has been on a downward trend since mid-January.
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This metric has plummeted by 45.5%, falling from $12.1 billion on January 19 to $6.63 billion on March 11.
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As of March 17, the TVL stands at $7 billion, 41% below the peak recorded on January 19.
Solana total value locked.
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This TVL decline coincided with a 56% drop in SOL’s price over the same timeframe.
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Multiple layer-2 protocols, such as Jito and Raydium, have also seen TVL decreases of 30% and 32% in the last month.
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The falling TVL indicates a decline in trader interest and suggests that Solana is struggling to draw in new users, even with lower transaction costs.
The slump in Solana’s price can also be linked to a decrease in on-chain activity within its ecosystem, as highlighted by data from a dashboard.
Key takeaways:
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A significant decline in network transactions preceded SOL’s price drop on March 17.
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The daily transaction count on the Solana blockchain has dwindled from an all-time high of 71,738 on January 23 to 24,505 on March 17, as illustrated in the chart below.
Chart of Solana’s deployed transaction performance.
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This suggests dwindling network engagement, which leads to lower fee revenues.
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This scenario adversely impacts SOL’s price, shedding light on the ongoing correction.
Solana funding rates remain negative
Solana’s open interest is decreasing, and the negative funding rates provide insight into the struggles of SOL’s pricing.
Key points:
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Solana’s open interest in the futures market has fallen from a local high of $8.57 billion on January 17 to $4.03 billion as of March 17.
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Open interest reflects the total number of outstanding futures contracts, and a decline indicates that more traders are closing their positions.
Future open interest for SOL.
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A drop in open interest typically signals decreased speculative demand, hindering upward price movement.
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SOL’s funding rates continue to be negative, measuring -0.10% on March 17, down from a peak of 1.37% four months prior.
Funding rate weighted by SOL open interest.
SOL price may drop an additional 35%
Currently trading 56% below its all-time high of about $294 set on January 19, SOL’s technical analysis indicates that there’s potential for further declines in the upcoming weeks.
Key levels to monitor:
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The altcoin has remained above $120, but buyers have struggled to push the price beyond $135.
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A dip below $120 could see the SOL/USDT pair fall to the low $110 range, previously set on August 5, 2025.
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This support level is crucial, as breaking and closing below it could trigger a decline to $100, and ultimately to $80.
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This would represent a 35% drop from the current price.
SOL/USD daily chart.
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Nonetheless, a positive divergence observed in the RSI indicates that buyers are accumulating SOL at these lower price levels.
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A break and close above the psychological level of $140 could suggest diminishing selling pressure.
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The digital asset might then rise to the 50-day simple moving average around $171, where strong resistance from sellers is anticipated.
Disclaimer: This article is not intended as investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research prior to making any choices.