Solana’s native token, SOL, suffered a sharp decline on Monday, plunging 8% to $124 as the broader crypto market faced selling pressure. This marks the first time since May 2022 that SOL has traded below its realized price of $134—a key metric reflecting the average cost basis of all last-moved tokens.
According to data from Glassnode, this downturn signals that the average SOL investor is now at a loss, a bearish indicator that could trigger panic selling and increased market volatility.
Solana’s Inflation Debate Sparks Market Uncertainty
The price dip coincides with an ongoing debate among Solana’s validators over a proposal (SIMD-0228) to drastically reduce the network’s annual inflation rate. If passed, the measure would cut inflation from 4.7% to approximately 1.5%, potentially altering SOL’s long-term supply dynamics.
Unlike market price, which fluctuates due to trading activity, realized price serves as a cost-basis anchor. A dip below this threshold often signals potential capitulation, where investors sell at a loss due to fear of further declines.
Technical Outlook: Is a Rebound Possible?
SOL’s price action is currently forming a descending channel, with key resistance levels at $130 and $134—previously strong support zones. Meanwhile, immediate support sits at $120 and $115.
Analysts suggest that if $120 holds and $128 breaks with strong volume, SOL could stage a rebound to $134, driven by dip buyers. However, failure to hold above $120 could deepen losses and accelerate further selling pressure.
Crypto Market Trends: Broader Impact on SOL
The latest market downturn has impacted several major cryptocurrencies:
- Bitcoin (BTC) climbed 2.06% to $83,509, maintaining its dominance.
- Ethereum (ETH) gained 0.77% to $1,881, showing resilience.
- Ripple’s XRP surged 3.39% to $2.2390.
- BNB (Binance Coin) led major gains, jumping 5.90% to $580.25.
- Solana (SOL) dropped 8% to $124, slipping below its key price level.
With meme coin controversies and regulatory scrutiny affecting investor confidence, the crypto market remains volatile. Solana’s ability to reclaim critical support levels will determine whether it can bounce back or face further declines in the coming weeks.