Solana price remains in a deep meltdown as concerns about its ecosystem continued. It crashed to a low of $160 on Monday, continuing a trend that started earlier this year when it peaked near $280. It has dropped in the last six straight weeks and is now hovering at its lowest level since December. We explore why SOL price has dived and whether a rebound is possible.
Meme coin investors are giving up
Solana price is struggling as the meme coins that made it the biggest Ethereum competitor implode. Data by CoinGecko shows that the market cap of all meme coins in its ecosystem has crashed from over $25 billion in January to less than $10 billion today.
A closer look at most of these coins show that they have crashed. For example, the Trump meme coin price has moved from $103 in January to about $15 today. Its market cap has plummeted from over $14 billion to below $2 billion. Libra price collapsed within a day after launch.
The same trend has happened among other meme coins like Pudgy Penguins, Dogwifhat, Fartcoin, and Cat in a dogs world.
A look at on-chain data and transactions show that most insiders and snipers have already dumped their tokens pocketing huge profits.
Therefore, Solana’s risk is that it will lose many of its members who fear that these meme coins are just scams.
Solana fees and volume has crashed
There are signs that this trend is happening. DeFi Llama data shows that Solana is no longer the king of the DEX industry as its weekly volume plunged by 36% to $16.6 billion. It has been overtaken by BSC and Ethereum, which handled over $17 billion and $18 billion, respectively.
All Solana DEX networks like Raydium, Orca, and Meteora have seen their volumes plunge as investors panic and sell.
More data shows that Solana network fees has crashed in the past few weeks. Its fees on Monday dropped to $1.1 million, its lowest level since September last year and much lower than $44 million in January.
The number of active Solana users has also plummeted to $86.5 millon, its lowest level since October 14.
Therefore, there is a likelihood that Solana price will continue crashing in the coming weeks unless its meme coin ecosystem plunges.
A potential catalyst will be signs that the Securities and Exchange Commission (SEC) will approve a spot SOL ETF later this year. Such a move will likely boost it as it has done with the Litecoin price.
Solana price forecast
SOL price chart by TradingView
The daily chart shows that the SOL price has crashed in the past few months. This retreat happened after the token peaked at $295.28 in January. It has formed a double-top pattern at $263, and has moved below the neckline at $169, its lowest level on January 13.
The Solana price has crashed below the 50-day and 200-day moving averages. With the spread narrowing, there is a likelihood that it will ultimately form a death cross pattern, a highly bearish sign in the market.
The Relative Strength Index (RSI) and the MACD indicators have all pointed downwards. Therefore, the path of the least resistance is downwards, with the next point to watch being at $109, the lowest swing in August last year.
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