Solana (SOL) is struggling to maintain momentum, dropping 7.35% on Feb. 24 to reach $157.25—its lowest point since Nov. 6.
This decline has erased nearly all the gains SOL made post-Donald Trump’s reelection in November, bringing its price down 47% from its all-time high of $295.31 on Jan. 19.
The latest downturn is being driven by a combination of factors, including high-profile hacks, an upcoming token unlock event, and weakening market sentiment.
Key Reasons Behind Solana’s Price Drop
- Solana’s alleged links with North Korea’s Lazarus Group and the Bybit hack
- Upcoming token unlock event causing supply concerns
- Declining open interest and negative funding rates in the futures market
- Memecoin scams damaging investor confidence
Hacks and Security Concerns Impacting Solana’s Market Confidence
Solana’s decline is partially linked to growing concerns about its association with high-profile crypto hacks and fraudulent activities in its ecosystem.
- The $1.4 billion Bybit hack on Feb. 21 has been linked to North Korea’s Lazarus Group, a notorious hacking organization.
- Onchain investigator ZachXBT discovered that wallets tied to the Bybit hack were also involved in Solana-based memecoin scams, particularly rug pulls on Pump.fun.
- These same wallets were linked to the $29 million Phemex hack in January, highlighting an ongoing trend of exploits within the Solana ecosystem.
The combination of security concerns and fraudulent activities has led to a decline in user trust and capital inflows, further contributing to today’s price decline.
Memecoin Collapse and Solana’s Transaction Volume Decline
Memecoins have been a major driver of Solana’s transaction volume, but the recent downturn in memecoin trading activity has significantly impacted demand for SOL.
- The $107 million rug pull of the Libra (LIBRA) token added to negative sentiment around Solana-based meme projects.
- Top Solana memecoins, such as Official Trump (TRUMP), Bonk (BONK), and Dogwifhat (WIF), have suffered heavy losses on both 24-hour and 7-day adjusted timeframes.
- Fewer memecoin transactions mean less demand for SOL, reducing network fees and impacting overall ecosystem growth.
As memecoin hype fades, investors are pulling back from Solana, decreasing buying pressure and accelerating the downtrend.
Upcoming SOL Token Unlock Event Adds to Selling Pressure
Another key reason behind Solana’s price weakness is its upcoming token unlock event.
- On March 1, approximately 11.16 million SOL (~$1.79 billion) will be released, primarily from the FTX estate.
- Investors fear that these unlocked tokens could flood the market, increasing selling pressure.
- Market uncertainty over how much of this supply will be sold is leading to risk aversion and a preemptive price decline.
With investors pricing in the impact of the unlock, SOL has struggled to gain momentum ahead of the event.
Declining Open Interest and Negative Funding Rates Signal Bearish Sentiment
The futures market is also flashing warning signs for Solana, as open interest (OI) declines and funding rates turn negative.
- Solana’s OI in the futures market has dropped from its peak of $8.57 billion on Jan. 17 to $5.11 billion as of Feb. 24.
- A declining OI suggests traders are exiting positions, reducing speculative demand.
- SOL’s weekly funding rates dropped to -0.48% on Feb. 24 from 0.354% two days earlier.
Negative funding rates indicate that short sellers are paying long traders to maintain positions, signaling a lack of confidence in SOL’s short-term price action.
Technical Analysis: Solana’s Head-and-Shoulders Pattern Signals a Possible 30% Drop
- Solana’s recent price drop appears to be part of a prevailing head-and-shoulders (H&S) pattern.
- This bearish formation consists of three peaks: a higher central peak (head) flanked by two lower peaks (shoulders), with a common support level (neckline).
- SOL has entered the pattern’s breakdown stage after falling below the neckline support of around $177.
A decisive breakdown below $177 increases the risk of SOL dropping toward the H&S target of approximately $110—down over 30% from current prices.
Can Solana Recover? What to Watch Next
While Solana’s near-term outlook appears bearish, a potential recovery could still emerge if certain conditions are met.
- If SOL reclaims the neckline support at $177, it could trigger a rally back toward the $215 resistance level.
- Stronger bullish momentum would be required for SOL to break above $250 and invalidate the H&S pattern.
- Improved investor confidence, a resurgence in memecoin activity, or positive macro trends could support a turnaround.
Final Thoughts: Solana Faces Critical Support Levels
Solana’s sharp price drop is being driven by hacks, declining memecoin demand, an upcoming token unlock, and bearish futures market trends. These factors have significantly weakened investor sentiment, leading to a near 50% correction from SOL’s all-time high.
Key support levels to watch:
- $157 – Current price level
- $150 – Psychological support
- $110 – Head-and-shoulders breakdown target
If Solana fails to hold above $150, a deeper correction toward $110 becomes increasingly likely. However, a rebound above $177 could spark a relief rally back toward $215 or higher.
As investors assess market conditions, Solana’s ability to maintain strong developer activity and ecosystem growth will be key to long-term recovery.
