Solana (SOL) is experiencing a period of notable volatility, with its Total Value Locked (TVL) dropping below $9 billion for the first time since November 2024. This decline has sparked concerns about user trust within the platform.
Despite this setback, Solana continues to stand out as a major player in terms of trading volume, ranking second only to Ethereum over the past week. Should user trust recover and a positive trend materialize, SOL might surge back above $200 in March. However, sustained selling pressure could also drag it below the $100 mark.
The current TVL of SOL stands at $8.5 billion, a significant decrease from its peak of $14.2 billion on January 18. TVL is a crucial metric that reflects the total value of assets locked in a blockchain's decentralized finance protocols, signaling user confidence and ecosystem liquidity.
This latest drop below the $9 billion mark has stoked concerns about the future direction of Solana. There are growing doubts within the community regarding the sustainability of key players like Pumpfun and Meterora, seen as overly exploitative. The recent controversy surrounding the debut of meme coin LIBRA has further added to the uncertainty in the ecosystem. A sustained decline in TVL could indicate waning user trust, potentially leading to additional price corrections for SOL.
Despite recent market corrections, Solana remains a dominant force in the cryptocurrency realm. While its trading volumes may not have returned to previous levels, Solana continues to exhibit significant user engagement and adoption.
Solana currently holds the second position in terms of trading volume over the past seven days, trailing only Ethereum but closely pursued by BNB, which has been gaining traction lately. In the last month, Solana has led the pack in terms of volume, outperforming BNB and Ethereum with a volume hitting $120 billion.
Despite recent price adjustments, Solana remains a heavily utilized blockchain, boasting substantial trading volume.
Looking ahead, if the current downturn persists, the Solana price could potentially test the $120 support level soon. A breach of this level could result in further declines towards $110, possibly even dipping below $100 for the first time since December 2023.
On-chain data suggests strong utilization of Solana, underscoring robust demand. An upward trend could see SOL testing resistance at $152, with a potential rally towards $183. Should user confidence rebound, SOL could even surge to $205, reclaiming values above $200 by March.
Analyzing the market sentiment, Lead Analyst Brian at Santiment notes, “For Solana, I am monitoring the steady rise in shorts on exchanges and increasing discussion rates of FUD. This indicates a potential turnaround for sentiment-driven assets like SOL... If markets bounce, don’t be surprised if Solana outperforms due to retail participation dropping out.”