Solana (SOL) fell below $130 on February 28, to a low of 126.10, having lost 6.9% in the last 24 hours and 26% in the last week. The fall follows investors’ anticipation of an eventual unlocking of 11.2 million SOL tokens from the FTX bankruptcy estate, which could put extra selling pressure on the token.
Key Reasons for the Price Fall
The price drop is also largely due to the upcoming token unlock on March 1, 2025. The unlock will bring out around $1.3 billion worth of SOL tokens into circulation, which has investors worried about more supply in the market. FTX, one of the largest Solana token holders, has been liquidating assets to settle creditors, and this has been putting selling pressure.
Based on recent data, 41 million SOL tokens have already been purchased by investors like Galaxy Digital and Pantera Capital. The market is also grappling with the decline in Solana’s decentralized finance (DeFi) ecosystem activity. Solana’s value locked (TVL) has declined drastically from $12 billion in mid-January to as low as $6.8 billion, reflecting a steep decline in user activity and liquidity.
Critical Support Levels and Volume Challenges
Besides the token unlock, Solana is also experiencing a stunning 99% drop in on-chain volume at a lowly $14.57 million from a November all-time high of $1.99 billion. The extreme decline in volume is one factor to consider regarding Solana’s stability in the market. As explained by analysts, SOL must retain significant support levels to avoid losses.
Solana has now broken the important support level of $127, with projections suggesting further declines to the $110 or $100 mark. Technical analysis indicators, such as the Relative Strength Index (RSI), are also indicating levels of oversell, but this should not be taken as an indicator of an immediate steep recovery.
ETF Developments and Market Sentiment
In spite of such odds, there is some positive news in store for Solana since two Volatility Shares futures ETFs have become live on the Depository Trust and Clearing Corporation (DTCC). Volatility Shares Solana ETF (SOLZ) and Volatility Shares 2x Solana ETF (SOLT) are important milestones towards general market acceptance. Although these ETFs don’t promise that they would be tradable immediately, they reflect increased institutional interest in Solana-based products.
The U.S. Securities and Exchange Commission (SEC) has also approved filings for spot Solana ETFs from a number of issuers, including 21Shares and VanEck. The action paves the way for possible future approval, contributing to improving market sentiment.
As Solana steers through these issues, the near future is paramount. The upcoming token unlock and record lows for trading volumes represent a very real threat to its price stability. Investors should be on high alert and keep an eye on technical and sentiment indicators as they attempt to read Solana’s future.
