Why is Solana (SOL) price down today?

Solana’s native token, SOL, is down 4% amid minor corrections across the broader crypto market. 

Data from Cointelegraph Markets Pro and TradingView shows SOL trading at $137 after failing to hold above $140 on March 27.

Key factors driving the SOL prices lower today include:

• A drop in network activity and total value locked.

• A classic bearish technical setup.

Decreasing network activity hurts SOL price 

SOL’s price drop today is preceded by a drop in the total value locked (TVL) in its DeFi applications. 

Key points:

• Solana’s TVL has been experiencing a downtrend since mid-January. 

• This metric dropped by 45.5% from $12.1 billion on Jan. 19 to hit four-month lows of $6.4 billion on March 11.

• This drop in TVL occurred in tandem with the decrease in SOL’s price, which is more than 53% down over the same period.

• Although this metric experienced a slight increase to $7.2 billion on March 25, it is now down 2% over the last three days.

• SOL’s price drop on March 27 was also preceded by a sharp decrease in the network’s DEX activity. 

• The chart below shows Solana’s DEX trading volume — the total value of crypto trades executed on decentralized platforms on the Solana blockchain — dropped from an all-time high of $39.9 billion on Jan. 19 to the current level of $2.3 billion. 

Solana’s decrease in TVL and DEX trading volume reduces the demand for the SOL token, pushing prices down.

Will SOL price drop to $55?

SOL trades 56% below its all-time high of around $295, established on Jan. 19, and the technical setup shows that the altcoin could drop further toward the mid-$50s.

Key points:

• SOL is trading within a bear flag pattern, indicating the possibility of continuing with the downward momentum if key support levels don’t hold.

• The bear flag developed after Solana’s rejection from the $270 resistance level to a 12-month low of $112 between Jan. 19 and March 11.

• The consolidation within the bear flag has SOL trading in an ascending parallel channel, with the latest drop testing critical support levels, including the lower boundary of the flag at $132.

•  A breakdown of this level could trigger another price crash.

• The bear flag’s downside target, derived from the height of the previous drop, is approximately $55, representing a 60% decline from the current price.

However, popular crypto analyst Jelle remains optimistic about Solana’s ability to recover from the downtrend and stage a sustained recovery.

Jelle said that SOL has made a solid recovery from the range lows at $112 but admitted that the price still has “a lot of ground to recover.”

As Cointelegraph reported, SOL has the potential to recover as long as its network’s TVL and fees fliop bullish, particularly in comparison to competitors.

Popular trader Flash said that once the SOL/USD pair confirms a falling wedge pattern in the daily timeframe, it could rally 71% from current levels toward $265. 

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.