Solana’s price continues to be in a downtrend, having decreased by more than 57% from its peak earlier this year, indicating the possibility of additional declines ahead.
On March 21, Solana (SOL) fell to $126.5, which lowered its market capitalization to $64.45 billion — a significant drop from over $127 billion a few months prior, erasing around $63 billion in total value.
The current downturn for Solana can be attributed to significant issues within its ecosystem. The market for its meme coins has plummeted, with the total market cap of Solana-based meme coins falling from over $25 billion in January to just $7.2 billion. At present, only Official Trump (TRUMP) boasts a market cap exceeding $1 billion.
This downturn has caused a considerable reduction in the trading activity on decentralized exchanges associated with Solana, such as Raydium, Orca, and Meteora. Data from a popular analytics platform indicates that volume on these exchanges has dropped by more than 34% in the past week, reaching $8.3 billion.
In contrast, decentralized exchange protocols on the BSC network achieved $14.2 billion in trading volume during the same timeframe, while Ethereum DEXs processed $9.65 billion. Over the last month, Solana’s DEX protocols managed $61 billion in volume, lagging behind Ethereum’s $78 billion.
This represents a significant shift, as Solana was the leading chain for DEX trading since last October. The downturn has also negatively affected network revenue. Recent data reveals that Solana generated $21.2 million in revenue this month, a steep decline from $90 million last month and a peak of $258 million in January.
Technical analysis of Solana’s price
The daily chart indicates that SOL has experienced a pronounced downward trajectory over the past few months, dropping from $295 in February to $126 as pressures within its ecosystem mounted.
On March 3, Solana exhibited a death cross pattern, occurring when the 50-day and 200-day moving averages intersected. The cryptocurrency is currently forming a bearish flag pattern characterized by a lengthy vertical line accompanied by a rectangular formation. This configuration typically suggests a substantial bearish breakdown ahead.
The pennant is forming at a crucial support level that Solana has struggled to maintain since April of the previous year. If there is a confirmed breakdown below this level, it could result in further losses, with the next target price anticipated to be around $100, which is roughly 25% lower than the current price.