Solana price risks plunging by over 60% next as SOL nears key inflection point

Key Takeaways:

• Solana’s (SOL) price slipped over 7% in the week ending March 6.
• The drop was higher than reported by any other top-ten altcoin by market cap.

Yerevan (CoinChapter.com) — Solana (SOL) dropped alongside the top-ranking crypto assets Monday, reaching almost $80 for the first time since Feb. 24. The drop appeared after SOL closed its previous weekly session at a 7% loss, the worst among the top-ten crypto assets in the same timeframe.

SOL’s decline over the previous week had it retest a crucial support level — the same that has been instrumental in limiting SOL’s downside bias across since November 2021. That raised its possibility to undergo a rebound towards the upper trendline of the ‘descending channel’ pattern, as shown in the chart below.

Also read: SOL gains 22% in 3 days, abandoning a bearish setup – comeback rally or bull trap?

But a rebound move will not likely confirm a full-fledged bullish retracement. That is primarily because the channel’s upper trendline has been limiting SOL’s upside bias; its retest last time on March 2 led to a 16% price pullback. Therefore, the downside setup could take an additional 65% off SOL’s value in the coming weeks.

Why is Solana (SOL) declining?

Crypto reporter Colin Wu informed his followers of the frequent phishing attacks that the Solana blockchain had experienced lately. The culprit websites offered users contest entries and then stole their SOL.

SlowMist blockchain security company suggested attackers aimed at NFT users and investors, who are frequent airdrop receivers and enter various contests.

The scam worked the following way: the hackers created a fake page with an NFT description and contest details. Users who entered the phishing website confirmed the transaction, thinking they would receive an airdrop. Instead, the phishers drained all the SOL from the wallet.

Also read: More downside risks for Solana as SOL forms head and shoulders pattern. 

Moreover, as CoinChapter covered in the latest Solana report, the blockchain’s total value locked (TVL) dropped 41% year-to-date. It stood near $6.5 billion on Mar.7, as the platform controlled under 4% of the Defi market.

Additionally, the frequent power outages in Q4 2021 – Q1 2022 did not help Solana’s declining number of users. The latest outage occurred on Jan. 7. The team attributed it to distributed denial-of-service (DDoS) attack, and a code change followed.