Solana’s worst 3-month crash – Is a bounce back or more turmoil ahead?

• Solana has shed over $40 billion in market cap, plunging to a three-month low.
• For SOL to recover toward $200 in the near term, holding the crucial $160 support is key.

Amidst market-wide FUD dragging many coins below their post-election highs, Solana [SOL] is facing an intense sell-off, plunging to a three-month low.

Is this a temporary correction, or are investors losing conviction in its long-term potential?

Solana losing key support

At press time, SOL was down 40% from its post-election peak of $274, amid a market-wide correction that has wiped out nearly $450 billion from crypto valuations since the new year.

While most high-cap assets struggle below key psychological levels due to demand-supply imbalance, SOL faces even stronger selling pressure. 

Solana has lost over $40 billion in market capitalization, deviating from its historically strong Q1 trend, where it typically reclaims key resistance levels to set new highs.

However, unlike previous cycles, SOL has formed three consecutive lower lows since its peak, with no significant “dip-buying” to absorb the sell pressure.

Source: TradingView (SOL/USDT)

If $160 doesn’t flip into solid support, SOL risks a deeper correction toward $130, having retraced to its election day opening price.

This puts long-term HODLers in control, as their conviction will be crucial for Solana’s recovery.

SOL at risk of entering distribution phase

Over 22% of SOL’s supply is held by long-term holders (6-12 months), with the chart showing little fluctuation in their holdings. This steady accumulation signals strong conviction in Solana’s long-term potential.

Source: Glassnode

However, with SOL nearly doubling in value over the past six months, the 6-12 month holder cohort remains a key metric to watch for potential shifts in market sentiment.

SOL has bounced 2% off its three-month low, with an 8% rise in trading volume signaling renewed buying at discounted levels. However, it remains too early to confirm $160 as a firm bottom.

The next few days will be critical for Solana’s price structure.

If bulls fail to defend this fourth support level, weakening HODLing sentiment among 6-12 month LTHs could trigger panic selling, exposing Solana to a deeper retracement toward its previous support at $130.