Is Solana preparing for a recovery or continuing to decline in Q2?

Solana (SOL) started the year 2025 with a difficult Q1, down 34% and losing 100 billion in market capitalization, wiping out all profits from the pre-election hype.

Now, with prices returning to the bottom levels of September 2024, will the second quarter bring recovery momentum or massive selling pressure?

The risk of surrender increases as FOMO declines

Like many other large-cap assets, Solana has struggled due to a combination of macroeconomic and microeconomic factors. However, the decline in Q1 was particularly severe, making SOL one of the hardest-hit assets among the leading coins in the market.

From a technical perspective, the 1-day price chart of Solana shows a lack of key support levels. Without strong bullish demand at critical thresholds, this asset is at risk of continuing to plummet, especially as HODL sentiment begins to weaken.

At the time of writing, SOL is at its lowest level in two years, with only 32% of the supply in profit. This imbalance increases the risk of a sell-off, as loss-making holders are forced to cut their losses further.

The Net Unrealized Profit and Loss Index (NUPL) indicates that short-term holders (STH) have entered the capitulation phase. This warns of the potential for a strong wave of sell-offs.

If the macro market does not recover soon, Solana may face a significant outflow of liquidity.

Source: GlassnodeAccording to history, Solana only finds a local bottom when entering the hope/fear phase, a time when FOMO surges and market confidence is restored. Without this change, selling pressure will continue, bringing the risk of a deep price decline.

The outlook for a price drop is further reinforced as the SOL/BTC pair has wiped out the gains made in mid-March, while also recording a sharp weekly decline.

At the time of writing, the MACD indicator is on the verge of turning bearish, warning that SOL may soon test the support level of 115 dollars.

Can Solana turn the tide in Q2?

SOL entered Q1 off to an impressive start, as the number of new addresses soared to 8 million in mid-January. However, this momentum did not sustain for long, the momentum fell sharply and this figure fell to a 6-month low of 312,000.

Source: GlassnodeIn the first quarter, Solana recorded an impressive explosion in staking volume and DEX trading, signaling strong participation from investors. However, both of these metrics have significantly decreased since then, falling below the peak reached before the election.

With increasing fears of capitulation and weak accumulation signals, Solana is at risk of losing the support level of 115 dollars.

If there is no change in market sentiment or a strong enough catalyst to stimulate demand, expectations for a prosperous second quarter are becoming increasingly distant.

Disclaimer*: This article is for informational purposes only and is not investment advice. Investors should do their own research before making any decisions. We are not responsible for your investment decisions*

• Short-term Bitcoin holders do not panic sell regardless of losses.
• Solana (SOL) is recovering slowly near the resistance level as Ethereum increases DEX volume.
• The Solana Policy Institute will lobby for SOL in the United States

Dinh Dinh

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