Solana (SOL) has seen its price decline to levels last seen in November 2024, hitting a low of $161.66 amid a wider crypto crash that has seen Bitcoin (BTC) drop to $94,078.68 and Ethereum (ETH) drop to $2,612.
With Solana reeling from the aftermath of the LIBRA memecoin crash which was launched on the blockchain and the upcoming token unlock, SOL could see a further decline towards $150.
The impact of the LIBRA memecoin crash
The Solana ecosystem has been rocked by the LIBRA meme coin rug pull that saw traders lose around $286 million.
The LIBRA scandal dealt a significant blow to investor confidence after the meme coin surged following a public endorsement by Argentina’s President Javier Milei.
However, the rally was short-lived, as LIBRA plummeted by over 94% within hours. Milei has since denied any wrongdoing.
The events that followed the launch of LIBRA revealed a classic rug-pull scenario where liquidity was removed, leaving investors with nearly worthless tokens.
This debacle has not only led to substantial financial losses but has also damaged investor trust in Solana’s ecosystem, as the fallout has sucked liquidity out of the market, possibly contributing to the current price decline.
Looming threat: FTX Estate’s SOL unlock
Adding to Solana’s woes is the looming unlock of $2.2 billion worth of SOL tokens by FTX’s estate scheduled for March 1.
The token unlock event is expected to increase the supply of SOL in circulation, potentially leading to further price drops if these tokens are sold off by investors or entities that acquired them during FTX’s bankruptcy proceedings.
The anticipation of this unlock has already started influencing market behaviour, with many investors seemingly preempting the event by selling off their holdings.
Bears firmly in control
From a technical standpoint, Solana has been tracing a well-defined descending channel, indicative of a bearish trend in the short to medium term.
The price action has formed a five-wave Elliott Wave structure, with the fourth wave hitting support at $150, which aligns with a key Fibonacci extension level.
Nevertheless, there is a notable bullish divergence in the Relative Strength Index (RSI), suggesting that the selling pressure might be weakening, which could preclude a reversal.
Solana price chart by TradingView
However, for a confirmed upward movement, SOL needs to break above the descending trendline resistance of around $173.
If it fails to do so, there’s a risk that SOL could revisit or even breach the $150 level, a psychological and technical support that could either halt the fall or signal further declines.
Solana price predictions: key levels to watch
With the current market conditions, Solana’s price predictions are cautiously bearish in the short term.
If Solana manages to hold above $161.86, there might be a chance for recovery, potentially targeting $180 in a nascent bullish phase.
However, if the support at $161.86 gives way, the next significant level to watch could be $150, which could act as critical support or, if breached, lead to an even more pronounced correction.
Investors should also keep an eye on resistance levels at $173, $195.81, and $216.90, where Fibonacci retracement levels suggest potential barriers to any upward movement.
If Solana (SOL) can maintain or regain investor confidence after the LIBRA incident and navigate through the upcoming token unlock with minimal sell-off pressure, there might be a path for recovery.
However, the current narrative paints a picture of significant risk, with the potential for SOL to dip further into the $150 range if bearish trends continue unchecked.
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