Solana’s native cryptocurrency, SOL, has witnessed a significant downturn over the past month, dropping 41% amid declining memecoin activity and a sharp decrease in its total value locked (TVL). The technical outlook suggests further potential losses, with SOL price at risk of falling to $110.
Solana’s TVL Plummets by $5 Billion in a Month
The total value locked on the Solana blockchain has fallen by 39.2% in the last 30 days, marking the largest monthly decline since November 2022, when the FTX exchange collapsed. The TVL, which peaked at $12.1 billion on 24 January, has now dropped to $7.4 billion.
TVL measures the total assets locked into decentralised finance (DeFi) protocols and serves as a key indicator of market sentiment. A rising TVL suggests growing investor confidence and liquidity, while a decline reflects capital outflows and reduced network activity.
Data from DefiLlama highlights that the biggest contributor to this decline is Raydium, which recorded a 53% drop in TVL over the past month. Other major decentralised applications, including Jupiter DEX, Jito liquid staking, and Save Lending, registered declines of 25%, 41%, and 42%, respectively. These drops have significantly impacted Solana’s on-chain transaction volumes, which fell from $97 billion in mid-January to just $11 billion this week.
This trend indicates waning investor confidence in the Solana ecosystem, with an overall 20-40% decline in network activity over the past month.
Memecoin Market Cap Shrinks by 70%
The drop in Solana’s TVL aligns with a significant decline in the market capitalisation of memecoins based on the blockchain. Most Solana-based memecoins have suffered double-digit losses, with many trading 80-90% below their peak values.
Solana’s collective memecoin market cap has plummeted from a peak of $25 billion in December 2024 to just $8.3 billion today, representing a 68% drop in under three months. This decline is reflected in Solana’s daily decentralised exchange (DEX) trading volume, which has plunged from $22.1 billion on 19 January to a mere $1.6 billion on 26 February.
The reduction in memecoin trading activity indicates diminished usage of the Solana network, negatively impacting liquidity and the demand for SOL.
SOL Price at Risk of Further Decline
From a technical perspective, SOL has formed a double-top pattern on its daily chart, suggesting potential further losses. Currently, SOL is trading at $137.17, 52% below its all-time high of $295 recorded on 19 January.
Immediate support for SOL is seen at $135. Should this level fail to hold, the price could decline further, potentially dropping to the September 2024 low of $120 and even the August 2024 low of $110. Such a move would represent a 22% decrease from current levels.
However, technical indicators suggest that SOL might be approaching oversold territory. The relative strength index (RSI) sits at 28, indicating that $135 could act as a strong support level and potentially attract buyers. If demand increases at this level, SOL could see a recovery in the coming days.
Crypto analyst Gum predicts that the lowest SOL could fall would be “around 10% higher than the last price Galaxy and other funds bought the FTX Locked $SOL.” According to this estimation, the minimum price before a bounce would be around $110.
