Dropped 70% but institutions bought in... What happened to Solana?

▲ Solana (SOL) ©

Solana is once again at the center of bullish sentiment, even after a 70% price drop. In particular, network activity metrics have soared to an all-time high, but the price remains suppressed, leading to market expectations that "if the next direction is set, the movement could expand explosively."

According to the investment media outlet TradingNews on May 22 (local time), Solana (SOL) is currently trading around $86.52, remaining below its 200-day moving average of $107.89 and its weekly 50-day exponential moving average (EMA) of $124. The current price is approximately 70% lower than the peak of $293-$295 recorded in January 2025. However, after successfully rebounding from the $80-$86 support zone recently, it is attempting to re-break the $95-$100 resistance zone, and the next 10 trading days are considered a critical period for determining its mid-to-long-term direction.

Technical trends are also gradually improving, according to analysis. The outlet explained that the daily Relative Strength Index (RSI) rebounded from the oversold zone near 30, and the Moving Average Convergence Divergence (MACD) also showed a slowdown in its downward trend. In particular, a large volume of short position liquidations is concentrated in the $90-$95 range, indicating a high possibility of a short squeeze (buying pressure generated to liquidate or cover short-selling positions) if that price is breached. Open interest has also recently turned back to an upward trend, indicating that market participants' directional bets are reviving.

Key factors behind Solana's bullish outlook include network upgrades and increased institutional adoption. Jump Crypto's validator client 'Firedancer' is currently operating on over 20% of mainnet validators, and the 'Alpenglow' upgrade aims to reduce transaction finality speed from approximately 12.8 seconds to 100-150 milliseconds. Solana co-founder Anatoly Yakovenko stated that this upgrade targets mainnet applicability in Q3 2026. The media described this as "a change approaching Visa-level payment speeds."

On-chain metrics also supported the bullish trend. Solana-based stablecoin supply reached $17 billion as of March this year, and decentralized exchange (DEX) trading volume surpassed Ethereum (ETH)'s $7.62 billion with $11.49 billion. Total Value Locked (TVL) in DeFi also increased to an all-time high of 80 million SOL. Furthermore, Visa, PayPal, Stripe, and Western Union are reportedly participating in building Solana-based payment and stablecoin infrastructure.

However, the biggest burden on the market was still identified as the FTX/Alameda supply overhang. The outlet analyzed that the liquidation of large volumes of SOL held by Alameda has consistently prevented attempts to rise through the $95-$100 range. TradingNews predicted, "If $95 is breached with accompanying trading volume, it could quickly open up to $100, $107, and $124." Conversely, it warned, "If $83 collapses on a weekly basis, the possibility of a drop to the $60s could resurface."

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*