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Solana Price Analysis: Risk of Drop to $120
Solana (SOL) is experiencing one of its toughest weeks in 2025. The asset has declined by 18% over the past seven days, making it the second-worst performer among the top 20 cryptocurrencies — trailing only Hyperliquid. This sharp correction has ignited speculation that SOL may revisit the $120 level, marking a significant retracement from recent highs.
Bearish Indicators Mount as Open Interest Surges
According to data from CoinGlass, Solana’s futures open interest (OI) has reached an all-time high of 71.8 million SOL, valued at approximately $14.5 billion as of Thursday. While high open interest typically signals increased market participation, the context here is concerning. Funding rates for perpetual contracts flipped from negative to positive, rising from -0.0065% to 0.0043%.
This dynamic can indicate an overleveraged market — where more traders are betting on price increases despite downward price movement. If the majority of open positions are long, this raises the risk of a liquidation cascade should the price continue to drop.
“Higher open interest and rising funding rates amid falling prices could result in an overleveraged market where the longs are caught off guard,” reported Cointelegraph.
Spot Market Weakness Signals Sell-Side Pressure
Beyond the derivatives market, on-chain and spot market indicators also point toward sustained bearish sentiment. Net taker volume has turned sell-heavy, indicating that aggressive sellers are dominating order books.
Additionally, cumulative volume delta (CVD) on spot markets has trended lower, suggesting that the current sell-off is not purely speculative — it’s being driven by actual selling of SOL in the spot market. This typically reflects more conviction from sellers and can serve as a strong signal of bearish momentum.
DeFi Metrics Decline Amid Falling Network Activity
The weakness isn’t just technical — fundamental network metrics are also deteriorating. Data from DeFiLlama shows that the total value locked (TVL) in Solana-based DeFi protocols has dropped by 16% over the past week. Daily transactions on the network have also declined by 11%.
Such declines in usage can affect sentiment and long-term valuation. As Cointelegraph noted, “Solana’s declining network activity and competition from other layer-1 blockchains are significant headwinds for any short-term price gains.”
Chart Patterns Suggest Deeper Correction Ahead
From a technical analysis standpoint, SOL’s daily chart is showing the formation of an inverted V-shaped pattern — a bearish reversal signal. After peaking in early September, SOL has declined sharply, erasing half of the rally that preceded it.
The relative strength index (RSI), which measures price momentum, has fallen from 69 on September 18 to 37, reflecting increased bearish pressure. Importantly, this level is not yet considered “oversold,” indicating there may still be room for further downside.
If the inverted V-pattern completes, SOL could retest its neckline around the $155 level — about 22% below its current price of $192.97.
Looking at the weekly chart, a more ominous double-top pattern may be forming, which could push SOL even lower, possibly toward the $120 support zone. This would represent a total drawdown of 40% from the current price.
Short-Term Relief Possible, But Caution Warranted
Despite the increasingly bearish structure on higher time frames, short-term charts show signs of oversold conditions. On lower timeframes, the RSI is dipping well below 30 — a zone often associated with potential for a bounce or temporary recovery.
However, any short-term relief rally should be viewed with caution unless it is supported by a recovery in volume, network activity, and a shift in derivatives positioning.
“SOL price may extend its downtrend toward the $150–$110 range if the support at $200 is lost,” Cointelegraph previously reported.
