Solana range trades after 45% drop as leverage reset caps volatility

​​​Solana range trades in little volatility

​Over recent weeks, Solana (SOL) has stabilised above its early February $67.70 low, following its sharp mid- to late January sell-off. It marked a sharp reversal from the tentative stabilisation many traders had hoped would extend into early 2026.

​What initially appeared to be a routine pullback quickly developed into a deeper sell-off, exposing structural fragilities and underscoring how high-beta crypto assets remain particularly vulnerable when sentiment deteriorates and leveraged positioning begins to unwind.

​At the start of the year, Solana attempted to recover ground lost in late 2025, with prices rebounding toward the $150 area. Sentiment was supported by intermittent inflows into Solana-linked investment products, sustained developer activity and ongoing narratives around its high throughput and low transaction costs. Beneath that surface stability, however, risks were building, notably an accumulation of long exposure in derivatives markets and comparatively thinner liquidity than Bitcoin or Ether.

​The immediate trigger for the downturn was a broader risk-off shift across global crypto markets. As investors reassessed rate-cut expectations and growth prospects, speculative positions were reduced across the board.

​Assets outside the top two by market capitalisation were hit first and hardest. Solana, which typically exhibits higher beta than Bitcoin and Ether, fell roughly 45% from its January peak as traders rotated into more liquid and defensive holdings.

​Leverage amplified the move significantly. In the run-up to the decline, derivatives data showed a notable build-up of long positions in SOL futures and perpetual swaps, with traders anticipating an upside breakout as resistance levels were tested.

​When prices failed to hold gains and instead broke below key short-term supports, stop-loss cascades were triggered. Funding rates deteriorated rapidly, increasing the cost of holding longs, and liquidations accelerated. The forced unwinding of leveraged positions overwhelmed spot demand, creating a feedback loop that drove SOL sharply lower.

​Institutional flows mirrored the change in tone. Earlier optimism around structured products and potential Solana exposure vehicles had hinted at measured institutional interest. In recent weeks, however, flows turned more cautious. Rather than cushioning volatility, larger allocators stepped back, reinforcing rather than dampening price swings.

​Ecosystem-specific sentiment also shifted. While Solana’s underlying fundamentals - including decentralised exchange activity, developer engagement and non-fungible token (NFT) ecosystem participation - remain competitive among layer-1 networks, recent on-chain metrics showed a decline in speculative trading volumes and user activity.

​For a network whose reputation rests on performance and a vibrant application layer, this divergence between structural strength and short-term price weakness contributed to a more guarded tone.

​Broader competition among smart-contract platforms added to the pressure. In a risk-off environment, rival claims of faster or cheaper infrastructure became points of scrutiny rather than enthusiasm, and traders trimmed exposure to assets perceived as less resilient during downturns.

​Solana’s recent performance illustrates how long-term conviction narratives can struggle to counteract risk aversion and technical breakdowns in the short-term.

​Despite the scale of the decline, evidence suggests the move has been driven more by positioning mechanics and sentiment than by fundamental deterioration. Long-term holders have not capitulated en masse, and developer activity remains comparatively resilient, indicating that Solana’s structural utility case remains intact.

​Looking ahead, Solana’s near-term direction will hinge on broader macro stabilisation and improved crypto liquidity conditions.

​A recovery in risk appetite and a reset in leverage could allow SOL to rebuild momentum. Conversely, renewed stress in traditional markets or further deleveraging could extend the downturn, particularly if speculative flows remain subdued.

​For now, Solana’s sharp correction serves as a clear reminder of how leverage dynamics and shifting narratives can dominate price action, even in ecosystems with credible long-term fundamentals.

​Solana bullish scenario:

​While Monday's low at $82.55 holds, a recovery towards the recent highs at $88.61 - $91.20 may be on the cards. If exceeded, the late January low at $96.94 may be reached as well.

​Solana bearish scenario:

​As long as SOL remains below its 15 February high at $91.20, downside pressure is expected to remains dominant. A fall through last week's low at $76.57 may lead to the $70.00 region being revisited. Below it sits the early February low at $67.70.

​​Short-term outlook:

Neutral with a bearish bias while below the 15 February high at $91.20 but above last week's $76.57 low.

​​Medium-term outlook:

Neutral with a bearish bias while below the 15 February high at $91.20 but above the $67.70 early February low.

Solana daily candlestick chart