Solana (SOL) recently experienced a rollercoaster ride, with initial gains fueled by news of its first exchange-traded fund (ETF) quickly evaporating. This swift reversal has prompted concerns among investors, particularly as technical analysis suggests a potential 20% drop in value.
On Monday, July 1, 2025, SOL rallied by 5%, reaching $160 following the announcement of its ETF launch. However, this upward momentum proved unsustainable, with all gains erased within 24 hours. This retracement highlights the altcoin's persistent technical weaknesses across both lower and higher time frames.
A critical support level for SOL lies in the $144.5–$147.7 range. Currently, over 14% of SOL's supply is concentrated around $144, making this a crucial level to hold. Should SOL break below this support, it could trigger a significant decline, potentially leading to a drop to $124 or even the $95–$100 range, where support becomes increasingly sparse.
Examining the lower time frame, SOL has struggled to maintain a position above the 50-day and 200-day exponential moving averages (EMAs) for over a month. Despite several bullish break-of-structure formations, including a recent surge above $148, SOL has failed to convert these into sustained uptrends. The $148 level is currently under pressure, and a drop below $137 would confirm a lower low, diminishing the prospects of a near-term bullish continuation. To regain upside momentum, SOL needs to successfully retest the $145–$137 demand zone and subsequently recover above $160.
The higher time frame paints a similarly bearish picture. In May 2025, SOL failed to breach the key resistance at $180 and has since been trending downward within a descending channel. While such patterns can sometimes lead to bullish breakouts, SOL has shown high sensitivity to Bitcoin's price fluctuations over the past month. Despite Bitcoin hovering near all-time highs, SOL has declined nearly 50% since January 19, 2025, indicating relative underperformance. If this bearish trend continues, a retest of the daily order block between $120 and $130 becomes increasingly likely.
The rapid evaporation of gains from the ETF announcement underscores the fragility of SOL's current position. While the ETF news initially sparked optimism, the underlying technical weakness and broader market pressures have quickly taken over. The concentration of supply around the $144 level means that a breakdown could lead to a cascade of selling, potentially exacerbating the decline.
Despite the recent price drop, Solana's network activity remains relatively strong, processing nearly 3,800 transactions per second. This is only a 13% decrease from the 4,370 TPS recorded on June 12, 2025, suggesting that network demand remains steady. This continued usage, even during the downtrend, could indicate that the selloff has outpaced fundamentals.
Disclaimer: This article is for informational purposes only and should not be considered financial advice.
