Solana’s ( SOL ) price trades 52% below its all-time high of $295 on Jan. 19. The 41% drawdown over the last month accompanies a 40% drawdown in the total value locked on Solana, with SOL’s technical setup pointing to further losses ahead.

Solana TVL drops $5B in 30 days

The total value locked (TVL) on the Solana blockchain has plummeted 39.2% over the last month, the largest monthly drawdown since November 2022, when the FTX exchange collapsed .

Solana’s TVL has fallen from an all-time high of $12.1 billion reached on Jan. 24 to $7.4 billion at the time of writing. 

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Solana TVL and onchain volumes. Source: DefiLlama

TVL measures the total value of all assets locked into decentralized finance (DeFi) protocols. As TVL increases, that means more coins are deposited into DeFi protocols and can indicate bullish sentiment. A falling TVL shows that investors are pulling their funds out of the ecosystem as well as decreasing network activity and liquidity.

Data from DefiLlama shows that the subsequent decrease in TVL was led by Raydium, with a whopping 53% drop in 30 days. Other major decentralized applications such as Jupiter DEX, Jito liquid staking, and Save Lending registered a 25%, 41% and 42% declines, respectively.

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TVL locked on Solana’s top DeFi protocols. Source: DefiLlama

These directly impacted Solana’s onchain volumes, which dropped from a weekly collection of $97 billion during the second week of January to $11 billion this week.

These metrics indicate a glaring shift in investors’ trust in the Solana ecosystem, leading to a 20-40% decline in activity on average over the past month.

Solana memecoin market cap plummets 70%

The drop in Solana’s TVL mirrors a drop in memecoin market capitalization as prices tank across the board.

Most Solana-based memecoins have posted double-digit daily losses, as shown in the figure below. A majority of these tokens are 80% to 90% from their peaks. 

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Solana-based tokens performance. Source: CoinGecko

As a result, Solana's collective memecoin market cap has dropped from its peak of $25 billion in December 2024 to $8.3 billion today. This represents a 68% drop in less than three months. 

Related: Solana (SOL) price sell-off accelerates — Will traders defend the $130 support?

This drop in the prices of Solana-based memecoins and market cap is preceded by decreasing DEX activity on the layer-1 blockchain. 

The chart below shows the daily DEX trading volume of Solana memecoins—including those deployed on Pump.fun—decreased from $22.1 billion on Jan. 19 to $1.6 billion on Feb. 26

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Memecoin trading volume on Solana. Source: Blockworks Research

The decrease in memecoin activity on Solana indicates low network activity and dwindling usage, negatively impacting demand and SOL price. 

SOL price eyes a further 20% drop

From a technical perspective, SOL’s price action has completed a double-top pattern as shown on the daily chart below. Now, the question is how low can Solana go?

SOL price is sitting on immediate support provided by the neckline of the prevailing chart pattern at $135. Losing this support will see the price drop to sweep the liquidity between the Sept. 6, 2024, range low at $120 and the Aug. 5, 2024, range low of $110. Such a move would represent a 22% decline from the current price.

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SOL/USD daily chart. Source: Cointelegraph/ TradingView

On the other hand, the position of the RSI at 28 paints oversold conditions. This suggests that $135 could provide a good entry position. Increased demand from this level, accompanied by high volumes, could initiate a sustained recovery for SOL in the coming days. 

Popular crypto analyst Gum believes that the lowest Solana’s price can go “would be around 10% higher than the last price Galaxy and other funds bought the FTX Locked $SOL.”

“This would be about $110 as the minimum before a bounce.”

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.