Solana (SOL) Price Drops to 5-Month Low as TVL Sheds $5 Billion

For the first time since September 2024, Solana's (SOL) price has dropped to $130. This sharp decline comes after the cryptocurrency failed to notch a new all-time high.

For the first time since September 2024, Solana's (SOL) price has dropped to $130. This sharp decline comes after the cryptocurrency failed to notch a new all-time high.

Instead, the price dropped by 43% this month.

Instead, the price dropped by 43% this month.

The technical setup appears similar to that of the 2022 bear market, which could see a deeper pullback from today's price levels.

As market sentiment turns cautious, the question is—will SOL break free from this bearish cycle?

SOL Falls to 5-Month Low

Earlier in the year, Solana's price flashed signs of reaching $300. But after hitting $294, the cryptocurrency encountered rejection.

Since that time, it has been downhill, with SOL failing to retest that peak.

Since that time, it has been downhill, with SOL failing to retest that peak.

While SOL dropped below $130 today, the weekly chart shows that the altcoin could follow a similar path that saw the price collapse during the 2022 bear market.

During that period, Solana's price, which reached $260 in November 2021, crashed below $10. It was also during that period that the 26-period Exponential Moving Average (EMA) crossed above the 12 EMA, which confirmed the extended bearish phase.

As of this writing, the same thing has happened as the 26 EMA (orange) has dropped below the 12 EMA (blue). If sustained, this crossover and the negative reading of the MACD, might suppress SOL's price.

As the chart shows, the 26 EMA crossed above the 12 EMA at the height of the 2022 bear market. This time, the same thing happened as the bear market is coming to an end.

The last time the 26 EMA dropped below the 12 EMA, it led to a 90% decline in a time frame of two months.

If this pattern repeats, it could see a continuation of the bear market in the coming months.

TVL Loses $5 Billion

Tvl Loses $ 5 Billion

Another sign that SOL could be heading toward the 2022 bear market path is its Total Value Locked (TVL).

In January, Solana's TVL neared $12 billion. But today, it has dropped to $6.93 billion.

Taking it back to the 2021 to 2022 period, the same metric collapsed from $10 billion to a sub-$1 billion level within months. The TVL is a key indicator that shows how much confidence users have in a protocol.

When the value rises, it indicates users are locking more assets into the protocol, signifying trust. However, in this case, the decline indicates that investor confidence in SOL is fading.

If the TVL continues to fall, Solana's price is likely to follow suit. If that is the case, then SOL could fall much lower below $130.

Looking at SOL's price potential on the daily chart, CCN observed that the Relative Strength Index (RSI) has dropped to the oversold region.

While the RSI measures momentum, it also shows if a cryptocurrency is overbought or oversold. Readings above 70.00 means it is overbought, while those below 30.00 indicates that it is oversold.

As of this writing, the indicator's rating is $25.42. It is also important to note that the RSI is yet to break above the downtrend.

If this remains the same, the Solana's price could drop to $109.92 at the crest of the wick shown below.

If selling pressure increases and demand for SOL fails to pick up, this prediction could be worse.

If that is the case, SOL could decline to $78.91, which would represent a 13-month low.