Solana Correction Presents a Buying Opportunity Amid Market Uncertainty
2025-02-26
Solana has been one of the hardest-hit altcoins in recent weeks, with its price down 50% from its all-time high of $295.
This decline has sparked concerns among investors, but it also presents a potential buying opportunity for those willing to take advantage of the market correction.
The sharp drop has been driven by lower on-chain activity, declining total value locked (TVL), and the fading hype around memecoins.
While these factors have created short-term pressure, Solana’s fundamentals remain strong, and long-term investors may find this to be an ideal accumulation phase.
Why Solana’s Price Has Dropped by 50%
Solana’s correction can be attributed to three major factors: declining on-chain liquidity, capital outflows to other blockchains, and the collapse of the memecoin-driven trading frenzy.
1. Solana’s TVL and On-Chain Activity Have Declined
One of the biggest indicators of Solana’s recent struggles is the $5 billion drop in total value locked (TVL). After peaking at $12 billion in January, Solana’s TVL has since fallen to $7.13 billion, highlighting a significant liquidity drain from the ecosystem.
Source: DeFiLlama
Much of this decline has been led by Solana’s top DeFi protocols:
- Raydium TVL dropped by 60% in under a month
- Jupiter DEX saw a 25% decline
- Jito liquid staking lost 46% of its TVL
- Kamino Lending recorded a 33% drop
As liquidity has decreased, on-chain trading volumes have also plummeted, dropping from $97 billion weekly in January to just $7 billion this week. This has created additional downward pressure on SOL’s price, as fewer transactions mean lower network fees and reduced demand for the token.
2. Over $500 Million Has Moved to Other Blockchains
Solana’s declining activity has led to a significant liquidity shift, with over $500 million in capital leaving Solana for competing blockchains like Ethereum, Arbitrum, and Sonic.
This trend highlights a shift in trader confidence, as many are reallocating their funds to ecosystems with perceived stronger incentives and lower risk exposure. Solana’s network congestion and recent concerns about token unlocking have further contributed to this outflow.
Solana’s fee burn dropped to its lowest level in months, signalling reduced usage. Crypto analysts have pointed out that traders are “walking away from the casino” as speculation around Solana’s ecosystem has cooled.
3. The Collapse of the Memecoin Boom
In late 2024, Solana became the epicentre of the memecoin explosion, with tokens launching almost daily and generating over $550 million in revenue from new token listings. At its peak, the Solana memecoin market cap hit $25 billion, fueling a speculative frenzy.
However, as the hype cooled off, memecoin valuations crashed by 80% to 90%, wiping out billions in liquidity. The overall market cap for Solana memecoins has dropped to $8.3 billion, and the decline has negatively impacted SOL’s price as traders exit high-risk assets.
While SOL itself is not a memecoin, the collapse of speculative trading within its ecosystem has contributed to its price struggles, reinforcing the downward trend.
Read more: Solana (SOL) ETF The Next Big Crypto Investment?
Why This Could Be a Strong Buying Opportunity
Despite the correction, several key factors suggest that Solana is nearing a potential bottom, making this an attractive entry point for long-term investors.
Source: Tradingview
1. Market Sentiment Is at Extreme Fear Levels
Historically, some of the best buying opportunities occur when market sentiment is at its lowest. Right now, Solana is trading near its lowest levels since September 2024, with fear dominating investor sentiment.
When fear levels are this high, oversold conditions can lead to strong reversals, especially if buyer confidence returns. Traders who accumulate during deep corrections often benefit when the market rebounds.
2. Solana’s Long-Term Fundamentals Remain Strong
While short-term liquidity issues have impacted price action, Solana’s technology and ecosystem remain among the strongest in crypto. The blockchain continues to be one of the fastest and most efficient networks, with low fees and high transaction throughput.
Additionally, institutional interest in Solana remains intact, with developers continuing to build on the network. As market conditions stabilize, Solana is well-positioned to regain momentum.
3. Technical Support Levels Indicate a Potential Reversal
Solana is currently testing the $140 support zone, a key demand area that has historically led to strong bounces. If bulls can hold this level, it could signal a shift in momentum, potentially triggering a recovery back toward $185 and higher.
Traders looking for confirmation should watch for a break above $150, which would indicate renewed strength. On the downside, failure to hold $140 could see further declines toward $125–$130, where additional buyers may step in.
Earning Passive Rewards While Waiting for Recovery
For those looking to capitalize on Solana’s volatility, staking provides an additional way to earn rewards while holding SOL.
Bitrue offers staking opportunities that allow users to earn passive income, making it a smart way to take advantage of Solana’s long-term growth potential.
How Bitrue’s Staking Works
- Users can stake SOL or BTR to earn rewards.
- Passive income opportunities allow investors to benefit during market corrections.
- Bitrue provides flexible staking options with competitive yields
By staking, investors can generate returns while waiting for market conditions to improve, reducing the downside risk of holding SOL during uncertain periods.
Read more about Solana (SOL):
Solana (SOL), Market Cap, Price Today & Chart History
SOL to USD: Convert Solana to US Dollar
Conclusion
Solana’s 50% correction has created uncertainty, but it may also be presenting a strong buying opportunity for those looking at long-term potential.
While TVL has declined, capital has moved to other blockchains, and memecoin speculation has cooled, Solana’s fundamentals remain strong.
With sentiment at extreme fear levels and key support zones being tested, this could be an ideal accumulation phase.
Investors can also take advantage of staking opportunities on Bitrue, allowing them to earn passive rewards while positioning for the next market recovery.
Frequently Asked Questions
Is Solana’s decline a cause for concern?
While Solana’s price has dropped 50% from its all-time high, its long-term fundamentals remain strong. Market corrections are common in crypto, and this may be a temporary downturn before the next bullish cycle.
What is the best way to take advantage of the correction?
Investors looking for long-term exposure can consider accumulating SOL at key support levels. Staking on Bitrue is also a great way to earn passive rewards while holding SOL.
What price levels should investors watch?
Solana’s key support zone is $140, with resistance at $150 and $185. A break above resistance could signal a recovery while losing $140 could push prices toward $125–$130
Investor Caution
While the crypto hype has been exciting, remember that the crypto space can be volatile. Always conduct your research, assess your risk tolerance, and consider the long-term potential of any investment.
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