Solana Plunges to $131 as Lending Drama Shakes Ecosystem Confidence
Market Structure Shifts Lower
- SOL suffered a 15% crash this week and dipped below November’s opening level.
- Jupiter’s “no risk” backtrack has led to a crisis of confidence in DeFi markets.
- After a six-week 30% decline, technical indicators are flashing oversold levels.
Solana had a tough week, with its price falling 15.1% and hitting $131.75 amid ecosystem fragility after the Jupiter lending debacle. The token is down 36.2% over the quarter and has lost $59 billion in market cap from its high of $263 this year. Marketing-led weakness turned into ecosystem strength depletion after Jupitern committed lending errors in their “zero risk” posts and warnings emerged that pushed the market through multiple support levels. The question for traders may be whether the lending-drama lows are in at $131 or a weaker outlook surrounding ecosystem risk drives the token mentally toward $100.
| Metric | Value |
|---|---|
| Asset | SOLANA (SOL) |
| Current Price | $131.75 |
| Weekly Performance | -3.13% |
| Monthly Performance | -15.09% |
| RSI (Relative Strength Index) | 41.1 |
| ADX (Average Directional Index) | 34.3 |
| MACD (MACD Level) | -5.90 |
| CCI (Commodity Channel Index, 20-period) | -62.23 |
RSI Hits 41.13 – Oversold Territory Matches September’s Pre-Rally Floor
With the oscillator at 41.13 on the daily, momentum is approaching oversold for the first time since September’s washout. At that time, similar RSI readings under 42 led to a 47% surge over six weeks. The weekly RSI is at 38.49, the deepest oversold reading since the FTX collapse.
Therefore, until the Jupiter overhang clears, traders and investors will probably face rougher seas with less favorable buying opportunities. The bullish scenario will likely revive if this upgrade delay proves temporary with growing conviction. It may present an even better buy spot if panic washes Solana back down to $90 or lower.
ADX at 34.35 Confirms Mature Downtrend Nearing Exhaustion
With the ADX at 34.35, the downtrend is pretty strong, and we know this by using the ADX reading. This wouldn’t just be your typical profit-driven dip. This would likely be something more fundamentally driven (trade war?). ADX is currently just above 25, which is the cutoff point for a trending vs. a sideways market. This is telling trend followers have been having a field day selling short over the past few weeks.
What is interesting to note is that ADX gradually increased from 22 to 34 throughout this decline, meaning that sellers did not expend all of their energy in this move. In simple terms, the ADX says that our trend conditions are still present. However, readings above 35 are often associated with overextended areas in trends that either pause or reverse. So, day traders will want to brace themselves for more volatility as this mature trend heads toward possible reversal territory.
50-Day EMA at $154 Transforms From Support to Resistance Ceiling
The symmetrical triangle on the daily chart that formed throughout November has now broken down to the downside, confirming the macro losing pattern. The low the triangle ($139.78) has fulfilled its technical obligation as a price target by inducing a dead cat bounce. This means that the path of least resistance right now is lower and that lower-highs are likely if bulls can even manage a bounce to the 50-day.
In a wider lens, the 20-day EMA at $138.61 serves as the nearest resistance, about 5% from the current levels. This previous support zone turns the bulls’ ledge into a hurdle to recover to the upside. The 10-day and 20-day EMAs pinching together indicates a likely squeeze in progress – the range will likely push into exhaustion once the price fuels outside of it.
Support Crumbles at $140 While Resistance Stacks Between $148-$174
There is a lot of resistance in the $148-174 range, as several technical levels come together there. The $150 area serves as a psychological level and the monthly pivot is at $148.13, which combined to turn back two bounce tries this week. The 50-day EMA is at $154.58, and the weekly pivot is at $166.59, are other resistance zones in play that the bulls need to overcome for a real recovery.
Currently, the support level defended by bulls is at $131, which has been maintained after three attempts following the Jupiter news. If we go below the current level, the subsequent strong support is close to the June lows at $122, while the psychological support at $100 could be the lowest point to reach. The weekly S1 pivot is at $141.44 which might act as a support level for a rebound.
The market structure suggests potential further pressure on the price, prompting a test of bids between $85-$110/share. This area marks prior price resistance and the 200-week moving average, offering a compelling test for confirmation bias bulls and a dip buy for longer-term investors.
Bulls Need Decisive Close Above $140 to Halt Bleeding
Buyers must break through the 50-day EMA and $140 level to invalidate the bearish outlook. If the $140 level holds, UNI could revisit the $125 support. Clinching a daily candlestick close below $125 might result in a sell-off as bears target $110, the 78.6% Fibonacci retracement.
If the price of SOLUSD incurs a further loss from current levels below the 50% retracement at $132.80, then an extension down to the 61.8% retracement at $121 is the likeliest scenario. Support should be expected at this level due to the previous pivot high that was established in late August. Buyers will likely step in around this area to start accumulating positions.
Considering the technical indicators that show the market has been negatively affected by recent news, it is likely that in the short term the market will stabilize between $131-140. We will have to wait for more news about the lending issue or more recent optimism about the French banking situation before the market moves above $150.
