After a robust rally in early summer, Solana (SOL) has entered a pronounced correction. Last week, SOL lost an additional 6% and now trades around $168, down approximately 20% from last month's high at $206. The technical setup has weakened as SOL fell below its 20-day and 50-day moving averages, and only narrowly defended its 200-day EMA near $160—an area of major historical significance for the asset.
This correction coincides with a period of broad weakness in the altcoin sector. Solana, once the clear leader among Layer-1 chains, has recently ceded transactional and revenue dominance to Hyperliquid, a rising star in the decentralized derivatives (perpetuals) space. Hyperliquid captured a record share of overall blockchain fees in July, underscoring Solana's recent decline in user activity and on-chain profitability. Dwindling interest in memecoin trading, which previously drove transaction spikes on Solana, has further compounded negative sentiment.
Solana technical chart: Support, resistance, and moving averagesTechnical Overview: Critical Zones and Momentum Factors
The critical battleground for bulls is the orange support zone just above $160, where both the 200-day EMA and prior lows converge. This level has acted as a "make-or-break" floor in past corrections. Bulls must defend this area to prevent a slide to $153 and, if breached, a potential retest of the $145–$142 region, which includes multiple Fibonacci levels and trendline support. A deeper breakdown would target $136, $125, $120–$118, and even $113–$105 in a full capitulation scenario.
For buyers to regain control, a close above the 50-day EMA at $167, followed by a breakout above the falling 20-day EMA at $171, is essential. Surpassing these levels would open a path to the $180–$187 resistance zone, a range where previous rally attempts have repeatedly stalled. Should bulls break through this "red zone," further upside targets appear at $195, $205, and ultimately the $219–$222 region—the so-called "golden pocket" which marked the top in February.
Volume trends reinforce these observations: declining trading volumes during the pullback signal seller exhaustion, but a lack of strong buying interest means a reversal is not yet confirmed. Any spike in volume on a move above $171 would be a bullish trigger to watch.
RSI, MACD, and Broader Market Sentiment
The daily RSI for SOL dipped below the neutral 50 mark last week, reaching as low as 45, but has since stabilized between 45 and 55. An RSI move below 45 would signal increased risk of further declines; conversely, reclaiming 55–60 would validate a short-term trend reversal. On the weekly chart, the RSI has cooled to neutral as well, reflecting ongoing indecision after a year of strong bullish momentum.
The MACD indicator, meanwhile, has flattened—another sign that momentum is pausing but not yet reversing. Short-term sentiment remains fragile, with many traders awaiting a catalyst before taking new positions.
Fundamental Catalysts: Revenue, Ecosystem Growth, and Competitors
Solana's technical challenges are mirrored in its ecosystem trends. The migration of user activity—and fees—to Hyperliquid is a stark warning: new DeFi primitives, especially those in perpetuals trading, are increasingly drawing users away from older Layer-1 blockchains.
Moreover, Solana's dominance in memecoins (such as Pump.fun and LetsBonk) has faded as new trends and protocols emerge. Sustained ecosystem growth will depend on renewed developer interest, new dApps, and improvements in user experience and network reliability.
Regulatory overhang in the US and globally, plus August's historical weakness for crypto markets, further dampen bullish enthusiasm. That said, the rapid pace of innovation means Solana could quickly rebound if macro conditions shift or if new "killer apps" generate fresh excitement.
What Could Move Solana Next? August & September Outlook
For now, price action remains in a statistically weak period—August has often been a difficult month for the entire crypto sector, with above-average volatility and frequent drawdowns.
If SOL can hold the $160 floor and break through the $171 and $180 levels with conviction, a recovery toward $195–$205 is feasible. But should the broader market or Bitcoin itself break down, SOL could quickly revisit deeper supports at $153, $145, and even sub-$130 if panic selling sets in.
Traders should monitor volume spikes, cross-chain revenue comparisons (especially with Hyperliquid and Ethereum), and news on Solana-based applications for early signs of reversal or deeper continuation.
Conclusion: Solana at a Crossroads
Solana sits at a technical and fundamental crossroads. Bulls must step in soon—or risk an extended correction. While the mid-term outlook depends on regaining key resistance levels, the long-term future of Solana will be shaped by its ability to innovate, retain user interest, and outpace competitors in a rapidly evolving DeFi landscape.
As always, risk management is critical in volatile periods: buyers should set clear stop-losses, and sellers should be wary of sudden reversals if bullish momentum returns.