Takeaways:
- Solana dropped 8.5% to $160.57 as crypto markets faced macro pressure, DeFi contagion, and widespread liquidations.
- DeFi losses on Stream Finance ($93M) and rising bad debt across protocols triggered redemption risks, pressuring Solana’s $4.1B TVL.
- Technical breakdown below $172.79 and the 200-day SMA reinforced bearish sentiment, though the RSI at 33signals potential for a relief bounce.
- Whale liquidations and negative funding rates accelerated sell pressure, but institutional inflows into Solana-linked ETFs show long-term confidence.
- Analysts say $157–$163 is the key support zone to watch, with a rebound likely if Bitcoin stabilizes above $103.5K.
Solana (SOL) fell sharply over the past 24 hours, dropping 8.48% to $160.57 as macroeconomic pressure, DeFi sector instability, and liquidation-driven volatility swept across the broader crypto market. The total crypto market cap declined 3.9% to $3.45 trillion, while Bitcoin and Ethereum slipped below $104,000 and $3,500, respectively.
Macro Weakness and Market Fear
Investor sentiment has plunged into “Extreme Fear” with the Crypto Fear & Greed Index falling to 27, according to Yahoo Finance. Heavy Bitcoin ETF outflows totaling $186.5 million exacerbated risk aversion, driving traders to de-risk portfolios across major altcoins.
As a high-beta asset, Solana’s price typically magnifies Bitcoin’s movements, and this latest pullback is no exception. Futures funding rates for SOL have dropped 62.84% week-over-week, signaling reduced demand for leveraged long positions. Analysts note that Bitcoin’s ability to defend the $103,500 support zone will be key to determining whether Solana can stabilize.
DeFi Contagion Adds Pressure
Solana’s DeFi ecosystem is facing renewed stress amid broader contagion fears. Stream Finance disclosed $93 million in losses, pushing total bad debt across lending protocols to $284 million, according to Decrypt. Analysts warn this could trigger a series of forced liquidations within the DeFi sector.
Solana’s DeFi TVL currently stands at $4.1 billion, and outflows have accelerated as users redeem positions. The network handled $4.3 billion in decentralized exchange (DEX) volume yesterday, but a further decline could impact staking yields and validator rewards, two key sources of long-term token demand.
Technical Breakdown and Trading Behavior
Solana’s price has broken below critical technical support levels, including $172.79 (pivot point) and the 200-day simple moving average at $179.75, confirming short-term bearish momentum. The Relative Strength Index (RSI) is at 33, suggesting oversold conditions, while the MACD reading (-6.4 vs. -5.48 signal line) shows continued bearish divergence.
On the four-hour chart, both the 50-day and 200-day moving averages slope downward, reinforcing a bearish structure. While this typically signals sustained selling, an oversold RSI could spark a relief bounce if Bitcoin steadies. Traders are watching for a daily close above $163.55, which aligns with a key Fibonacci retracement support.
Institutional vs. Retail Divergence
A notable divergence has emerged between institutional and retail sentiment. Institutional entities continue to show confidence, with Solana-linked ETFs recording steady inflows, while retail participation has declined sharply. Smaller traders appear to be taking profits or exiting volatile positions, adding to short-term price weakness.
At the same time, futures funding rates have turned negative, meaning short traders are paying longs, a sign of growing bearish bias in the derivatives market.
Medium- to Long-Term Outlook
Despite the current downturn, analysts remain constructive on Solana’s long-term trajectory. The blockchain continues to post strong fundamentals, including high throughput, low transaction fees, and expanding institutional adoption. If market conditions stabilize and DeFi outflows ease, SOL could attempt to reclaim the $170–$180 zone later this quarter.
For now, short-term volatility remains elevated, with traders eyeing $157 as near-term support and $163–$165 as the key resistance band to watch for a potential rebound.