The entire cryptocurrency market has plunged 16% in the past 24 hours amid geopolitical tensions and Japan’s recent interest rate update.
Solana’s inability to break out above its all-time high, coupled with high inflation rates and low real transaction volumes, signals a potential crash ahead.
Venture capital continues to increase the supply of SOL.
Solana’s weak financial statements raise questions about SOL’s long-term prospects.
Solana may never surpass its all-time high of $260 set in November 2021. Investors who buy more SOL fear losing their investment as venture capital firms continue to increase supply by issuing new tokens.
SOL had a circulating supply of 301 million when it reached its ATH, but three years later another 161 million tokens were added.
Since August 2023, an increase of 60 million soles has been made, resulting in an annual inflation rate of 15%.
With real transaction volume at its lowest level in five years according to Messari indicators, Solana is likely to collapse, as previous research by AMBCrypto has shown.
Negative returns put Solana in deep red
According to Bankless, Solana has suffered a net loss of $2.53 billion over the past four quarters, wiping out revenue and falling into the abyss.
This financial pressure highlights the unsustainability of Solana’s current economic model.
Due to high inflation rates, SOL may never break through its all-time high.
Further investment is increasingly risky as mounting losses and inflationary pressures could jeopardize Solana's long-term viability and market performance.
SOL price signals bearish sentiment after global M2 money supply hits all-time high
As this TradingView chart shows, the global M2 money supply has reached an all-time high, flooding the economy with money.
As the value of a currency decreases, increased liquidity typically leads to higher cryptocurrency prices.
Despite this trend, Solana (SOL) has not reached new all-time highs like Bitcoin (BTC). This gap suggests that SOL will face a significant market downturn.
While BTC thrives with the additional funding, SOL’s failure to rise similarly suggests there may be issues or market conditions that could limit its growth relative to other cryptocurrencies.
Comparison of BTC and SOL historical charts
Additionally, the chart provides objective insight that Solana may have peaked in this cycle, something many are still unaware of.
Bitcoin hit a new all-time high, but as this Walletinvestor.com comparison chart shows, Solana didn’t surpass its previous peak.
This divergence highlights the struggles Solana faces despite the overall bullish market trend.
Bitcoin’s rise highlights its dominance, while Solana’s failure to reach new highs suggests underlying problems or falling demand.
Investors should keep an eye on the charts, as Solana’s performance suggests it may not be able to match Bitcoin’s success in the current cycle.
SOL is about to reach the liquidation level
According to on-chain analytics firm CoinGlass, the two main liquidation levels as of now are $100 (below) and $130 (above).
If the market continues to fall and drops to the $100 level, $40.5 million of long positions will be liquidated. Conversely, if sentiment changes and SOL rises to the $130 level, nearly $140 million of short positions will be liquidated.
