Solana (SOL) entered 2025 with high expectations but suffered a devastating first quarter, plunging 34% and shedding $100 billion in market cap. The decline wiped out all gains from the pre-election rally, leaving SOL at its September 2024 lows. Now, as Q2 begins, the critical question remains: Can Solana recover, or will bearish pressure continue to dictate price action?
Capitulation Risks Loom as Solana Struggles for Support
Solana’s sharp decline has been driven by both macroeconomic headwinds and fading investor sentiment. With no clear technical support on its daily (1D) chart, SOL remains highly vulnerable to further downside. If bullish demand fails to materialize, the risk of another steep sell-off remains high.
Pumpfun(@pumpdotfun) deposited 65,284 $SOL($8.16M) to #Kraken again 30 mins ago.
— Lookonchain (@lookonchain) April 1, 2025
So far, #Pumpfun has deposited 2,799,060 $SOL($534M) to #Kraken at $191 and sold 264,373 $SOL for 41.64M $USDC at $158.https://t.co/TLa0Z7y4zb pic.twitter.com/synbGfLabm
Currently, only 32% of Solana’s supply is in profit, marking a two-year high in supply distress. This imbalance increases the likelihood of capitulation, as underwater holders may be forced to exit their positions. Furthermore, Solana’s Net Unrealized Profit and Loss (NUPL) metric signals that short-term holders (STH) have entered a capitulation phase—a trend historically associated with increased selling pressure.
Adding to the bearish outlook, the SOL/BTC pair has erased its mid-March gains, registering a sharp weekly decline. Additionally, the MACD indicator is nearing a bearish crossover, signaling that SOL may soon test its crucial $115 support level.
Will Q2 Spark a Turnaround for Solana?
Despite the weak price action, Solana started Q1 with strong fundamentals. The number of new addresses surged to 8 million in January, reflecting early investor optimism. However, this momentum has since faded, with new addresses dropping to a six-month low of just 312,000.
Similarly, staking participation and decentralized exchange (DEX) volume—key indicators of network engagement—spiked earlier in the year but have since declined significantly. Without a resurgence in accumulation or a major catalyst to restore market confidence, a bullish reversal in Q2 appears unlikely.
For Solana to regain its footing, it must hold the $115 support level and attract renewed buying interest. Otherwise, further downside remains a real possibility as market sentiment continues to wane.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
Also Read: PumpFun Launches PumpFi: A New Era for Memecoin Financing on Solana
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
