Solana has faced significant selling pressure in its recent transactions, dropping to levels not seen in nearly the past two years. This sharp decline is a result of overall market weakness, and SOL has fallen well below its previous support zone.
However, despite the decline, early signs of stabilization are evident. From past patterns, Solana may recover from here, ultimately aiming for a rise around $100 or even higher.
Solana has experienced similar situations in the past.
According to on-chain valuation indicators, Solana is significantly undervalued. The market cap to realized value ratio (MVRV) has fallen to its lowest level in the past two and a half years. This indicates that SOL's market value is well below the acquisition cost of the circulating tokens, and many holders are facing unrealized losses.
Such situations are historically seen towards the end of a decline, rather than as an early sell-off. When realized value significantly exceeds market value, selling pressure often weakens. Investors find it difficult to let go in anticipation of losses, which leads to stabilization. This valuation gap supports the situation where SOL is trading below its fair value.
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The profit margin data supports this view. Currently, only 21.9% of Solana addresses are in profit, while about 78.1% of holders are underwater. This difficult situation coincides with historical instances when the market hits bottom, and low prices attract demand from value investors.
In past cycles, profit margins around or below 20% have led to significant recoveries. A decrease in profit-taking suppresses supply, and stagnant prices encourage accumulation. If history repeats itself, Solana may attract renewed attention from investors aiming for a rebound from significantly undervalued levels.
As of the time of writing, Solana is trading around $86 and is above the 23.6% Fibonacci retracement level. This level is considered support in a bear market. As long as SOL can maintain this level, downside risk remains limited, increasing the potential for a technical rebound.
The current stable trend suggests that SOL may be forming a bottom. Recovery will require improved capital inflows. The Chaikin Money Flow indicator is in negative territory but is trending upward, indicating initial signals of deceleration in capital outflows and easing selling pressure.
If it clearly breaks above $90, Solana will be on a path to recover to $100. If it turns the 61.8% Fibonacci level around $105 into support, it will be confirmed. Conversely, if capital inflow does not materialize, progress may reverse. If it falls below $81, SOL is at risk of dropping to $75 or $70.
