Solana (SOL) is facing a critical price decline, plunging to $138 amid worsening market conditions and a collapse in its meme coin ecosystem. The token, which has dropped 53% from its yearly high, recently formed a death cross pattern, a bearish technical signal that suggests the possibility of further downside.
Solana’s Decline and Meme Coin Woes
Solana’s sharp decline coincides with a broader downturn in its meme coin sector. Data from CoinGecko shows that the total market capitalization of Solana-based meme coins has plummeted from over $25 billion in January to just $7.6 billion. Among the hardest-hit tokens:
- Official Trump (TRUMP): Down 10% in the past week, now with a market cap of $2.4 billion.
- Bonk, Dogwifhat, Pudgy Penguins, and Fartcoin: Each down by over 20% in the past seven days.
Solana meme coins have been hit hard following several high-profile collapses, including Libra, which once surged to a $4 billion market cap before crashing after being promoted by Javier Milei.
Trump’s Crypto Stockpile and ETF Speculation
Despite speculation that Solana could be included in President Donald Trump’s crypto stockpile, this potential boost has failed to lift the token’s price. A Polymarket poll now places the odds of a Strategic Solana Reserve at just 25%, down from over 40% earlier this month.
On a more positive note, the likelihood of a spot Solana ETF being approved by the SEC later this year has risen to 86%, according to Polymarket data. However, despite this optimism, the market remains cautious as Solana struggles to find strong support.
Further Declines for SOL?
The SOL/USD daily chart reflects a steep downward trajectory:
- The coin has fallen from near $300 to $140 in just a few months.
- SOL has broken below its ascending trendline from August 2023.
- It has fallen under the key support level of $170, marking the lowest swing since January 13.
- A death cross has emerged, as the 50-day moving average has crossed below the 200-day moving average, reinforcing bearish sentiment.
With these technical factors in play, Solana could continue falling, with the next psychological support level around $100.
Why Solana?
Solana, founded in 2020 by Anatoly Yakovenko, Greg Fitzgerald, and Raj Gokal, has gained widespread adoption due to its high-speed transactions, low fees, and developer-friendly tools. Its blockchain leverages a unique Proof of History (PoH) and Proof of Stake (PoS) consensus mechanism, making it an attractive platform for both serious projects and speculative meme coins.
Meme coins, in particular, thrive on Solana due to:
- Low Transaction Fees: Enables frequent trading and easy token launches.
- High Speed: Facilitates high-volume speculative trading with minimal slippage.
- Developer-Friendly Tools: The Solana Program Library (SPL) and Rust support make launching meme coins effortless, fueling rapid ecosystem growth.
However, these same factors also expose Solana’s ecosystem to extreme volatility and high-profile rug pulls, as seen in recent meme coin collapses.
Solana’s current market structure suggests that further pain could be ahead, especially with its death cross pattern reinforcing a bearish trend. While optimism remains regarding an SEC-approved Solana ETF, the broader decline in its ecosystem—particularly among meme coins—continues to weigh on investor confidence. With the next key support level at $100, traders will be watching closely to see if Solana can stabilize or if further declines are inevitable.
