Solana’s price has faced significant pressure over the past two months as concerns about its ecosystem continue to mount. The cryptocurrency has tumbled from its year-to-date high of $295.52 to a low of $112 this week, erasing $71 billion in market value. As a result, Solana’s market cap has plunged from $139 billion to $68 billion.
Factors Behind Solana’s Price Decline
The ongoing crypto market downturn has contributed significantly to Solana’s price drop, pushing the total market capitalization of the industry down to $2.8 trillion. However, other ecosystem-specific factors have exacerbated the decline.
One major concern is Solana’s growing association with meme coins. The market capitalization of all Solana-based meme coins tracked by CoinGecko has plummeted from over $25 billion earlier this year to just $7.7 billion. Many of these projects have turned out to be rug-pull scams, further damaging investor confidence.
Additionally, a large token unlock earlier this month, linked to recent FTX distributions, has introduced more tokens into circulation. This influx has raised concerns about dilution, exerting downward pressure on Solana’s price.
Solana has also ceded market share in the decentralized exchange (DEX) sector to Ethereum. According to DeFi Llama, Solana’s total DEX volume over the last 30 days stood at $76.95 billion—falling behind Ethereum’s $84 billion.
Can Solana Stage a Comeback?
Despite the recent struggles, technical indicators suggest that Solana could see a significant rebound once the broader crypto market stabilizes. The accumulation and distribution indicator on the weekly chart shows that investors have been accumulating SOL throughout the downturn, signaling potential long-term confidence.
More importantly, Solana is forming a cup-and-handle pattern—a bullish technical formation characterized by a rounded bottom, a horizontal resistance line, and a pullback phase. In Solana’s case, the horizontal line connects its highest levels from 2021 and 2024. The recent price retreat represents the handle formation.
If Solana maintains support above $100, technical analysis suggests a strong likelihood of a breakout. The depth of the cup measures around 95%, and applying this same distance from the breakout point indicates a potential price target of $505—a 270% increase from current levels.
Long-Term Outlook
While the cup-and-handle formation is a promising sign, investors should be mindful that such patterns take time to fully develop. The cup itself took nearly three years to form, meaning that a potential 270% surge could unfold over months or even years.
Overall, while Solana faces short-term challenges, the technical setup and investor accumulation suggest that a major rally could be on the horizon once market conditions improve.
