- Solana has rebounded above $120 but remains 60% below its all-time high.
- Solana’s real economic value (REV) has dropped 90% due to reduced meme coin trading.
- A double-top formation and rising network inefficiencies indicate a bearish divergence.
Solana is showing signs of recovery above $120 amid a volatile crypto market. Despite a 14% decline over the past week, SOL has surged 5.98% on March 11, temporarily halting a bearish streak.
However, analysts caution that the recovery may be short-lived, as declining revenues and technical sell signals point to further downside risks.
On the daily chart, Solana is showing a slight 1.14% intraday pullback. The recent price movement appears to be a retest of the broken $130 demand-turned-supply zone.
The asset remains nearly 60% below its all-time high of $295, with a “death cross” event forming between the 50 and 200 EMA lines. Additionally, the 100 and 200 EMA lines are nearing a bearish crossover, further signaling a potential downturn.
Brandon Farmer, an analyst at ZeroKnowledge Polygon, suggests that Solana’s previous economic strength was largely driven by the surge in meme coin trading on decentralized exchanges. The increased demand for block space fueled high transaction volumes, creating a “SOL wealth effect” that pushed prices higher.
However, with meme coin activity sharply declining, Solana’s weekly real economic value (REV) has dropped 90% from its peak. Farmer warns that meme coin-driven growth is “unsustainable and mercenary,” leaving Solana vulnerable to further losses.
Technical analyst Gert van Lagen highlights a double-top formation on Solana’s weekly chart, suggesting a strong bearish divergence. Additionally, Solana’s failed non-vote transaction rate has climbed to 75%, indicating inefficiencies in network transactions. Van Lagen warns that if bearish momentum continues, Solana could face a significant downswing, potentially dropping below $1 in an extreme scenario.
While Solana’s short-term outlook remains uncertain, its ability to reclaim key resistance levels will determine whether it can sustain its recovery or succumb to further losses.
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