Solana price has been recovering this week after crashing to $112.50 on March 12. The price peaked at $142.50, its highest since March 7 last year. This article explores if the SOL price will bounce back toward the critical resistance of $200.
Solana Meme Coins and Reputation Issues
The decline from $290 in February to $112 this month mainly stems from significant reputation damage. Once a reputable chain for decentralized public infrastructure networks (DePIN), decentralized finance (DeFi), decentralized science (DeSci), and NFTs, Solana’s image has shifted since becoming a key player in the meme coin sector. The launch of meme coin generators allowing rapid creation of meme coins led to an influx of transactions and revenue, totaling over $360 million in fees this year, surpassing Ethereum.
However, this influx also resulted in scams such as rug pulls, which deteriorated Solana’s reputation. An example includes Libra coin, whose market cap surged to over $4 billion, before collapsing. Additionally, the Trump token saw similar volatility, rising past $14 billion before dropping.
Solana’s meme coin market cap has fallen from over $30 billion in January to approximately $8 billion today.
SOL Metrics Have Worsened
Recent metrics indicate a decline in Solana’s performance. According to TokenTerminal, Solana earned $23 million in fees this month, a notable decrease from over $252 million in January and $85 million in February. Revenue plummeted from $126 million in January to $3 million this month. Additionally, monthly user count dropped to 67.8 million from 97 million in January, leaving uncertainty about whether users will return as many may shy away from meme coins.
For a potential rebound, Solana’s meme coin ecosystem needs to recover. Some coins, like Popcat and Dogwifhat, have seen increases of over 20% in the past week.
Solana Price Technical Analysis
The daily chart indicates SOL hit a low of $120.50 this month, a critical level indicative of a quadruple bottom pattern with a neckline at $296, typically a bullish sign. A bullish divergence is apparent as oscillators show rising trends, suggesting potential continued upward momentum.
However, a rising wedge pattern also emerged, posing a risk of reversing back into a downtrend. A drop below the key support at $120 may signal a decline to the next level at $100.
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