Solana’s Decline Below Realized Price

Solana (SOL), previously the third-largest cryptocurrency by market cap, has dropped below its realized price for the first time in nearly three years.

On March 11, SOL fell to about 8% below its realized price of $134, a level not seen since March 9. This shift is significant for the token, which has seen both sharp rallies and declines recently.

> Note: The realized price represents the average price at which tokens were last moved or purchased. When an asset drops below this threshold, it indicates many holders are at a loss, having purchased at higher prices.

The last drop below the realized price occurred in March 2022, leading to a prolonged downturn before recovery in November 2023. While minor dips have happened before, such as the sub-$2 drop in November 2020, the current decline is happening amid broader market weaknesses.

Solana’s Price Drop and Market Selloff

Solana’s downturn is part of a larger crypto market selloff, contributing to downward pressure on SOL. Blockchain analytics firm Glassnode indicates that sentiment across the industry has declined, impacting the price.

Another factor in Solana’s struggles is a significant drop in network revenue. According to DefiLlama, daily fee revenue on the Solana blockchain has fallen to about $420,000, representing a 90% decline from its January peak when SOL traded around $250. This decline coincides with a slowdown in memecoin activity, which had previously driven trading volume.

Historical Trends and Uncertainty

Historically, a dip below the realized price level does not guarantee a prolonged downturn; SOL has rebounded in the past. However, drops below this threshold have previously led to multi-week declines before recovery. The last major dip occurred in early 2022, resulting in an extended bearish phase until late 2023.

Market participants are divided on whether this pattern will repeat. Unlike before, SOL’s current downturn coincides with broader market weaknesses and decreased fee revenues, making recovery more challenging.

However, the cryptocurrency market is known for its volatility, with sharp rebounds often following downturns.

Bullish vs Bearish Scenarios

Looking to the future, analysts are split on Solana’s long-term prospects. In October 2023, VanEck released a model predicting SOL could see a 10,000% increase by 2030 if the blockchain reaches 100 million users, pushing its price above $3,200 by decade’s end. Conversely, the same report showed a bearish scenario where SOL could drop as low as $9.81 due to stagnating adoption and intensifying competition.

The recent decline below its realized price could suggest rising bearish sentiment, but the future will depend on factors like network adoption, technological advancements, and macroeconomic conditions. Traders and investors will closely monitor Solana in the coming weeks to see if it can recover or if it faces further declines. Currently, the token is under significant pressure from both internal and external market forces, leaving its next move uncertain.

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