Solana Sentiment Falls Off A Cliff After A 40% Drop In 4 Weeks: What’s Next?

The latest data shows that Solana is trading at around $170, below $175, a critical support level marking the lows of December and January 2025. From its price action, the coin now risks further losses after an encouraging uptick in Q4 2024 that saw it peak at $295 on January 25. With prices under pressure, it looks like more SOL holders could capitulate, fueling panic selling.

As Solana faces renewed selling pressure, investor sentiment is also nosediving. The latest data from Santiment reveals that investor sentiment is at its lowest monthly level. The collapse marked two days of steady losses after prices shot higher to $295 on January 19, two days after President Donald Trump’s team launched the “Official Trump” meme coin ahead of his inauguration on January 20.

Unlike Bitcoin and Ethereum which have struggled to break key resistance levels, Solana’s steep decline is due to several factors including the expectation of a spike in supply once the FTX estate unlocks 7.5 million SOL on March 1. This extra infusion of SOL could see the token plunge as investors brace for potential liquidation by the FTX estate.

Additionally, concerns about network reliability and high transaction failure rates in DeFi protocols on Solana have contributed to the negative sentiment surrounding the coin. Analysts observe that multiple dApps on Solana are struggling due to unusually high transaction failure rates, raising concerns about whether the network can be a reliable hub for DeFi activities.

Overall, Solana’s price drop and deteriorating sentiment reflect a challenging period for the cryptocurrency as it faces various headwinds in the market.