Solana (SOL) has experienced a sharp decline of 36% this month, dropping to $120, making it the worst-performing top asset in the market. While some traders are hoping for a rebound, a combination of weak sentiment, large-scale sell-offs, and external factors may make it difficult for SOL to recover anytime soon.

Technical Indicators and Potential Rebound

From a technical perspective, Solana’s current price is signaling potential dip buying. The Relative Strength Index (RSI) shows an oversold condition, while a bullish Moving Average Convergence Divergence (MACD) crossover suggests a possible bullish reversal. These technical indicators suggest that Solana could experience a rebound if buying pressure picks up. However, with risk appetite still low in the market, it remains to be seen whether the bulls can leverage these technicals to trigger a recovery.

The Impact of Large-Scale Sell-Offs

Despite the technical indicators, the major factor weighing on Solana’s price is the ongoing sell-offs. A significant player in the market, known as “Pumpfun,” has been contributing to the downward pressure. Recently, Pumpfun transferred 196,370 SOL tokens worth $25.3 million to Kraken and has offloaded a total of 2.6 million SOL tokens, valued at over $500 million. This massive supply dump has played a crucial role in keeping selling pressure high and preventing any significant recovery.

The presence of increasing sell-side liquidity in the market, especially in a risk-off environment, further dampens the potential for a strong rebound in Solana’s price. Until the market sentiment shifts and traders start buying again, SOL is likely to face challenges in finding support.

Weakening Network Activity

Beyond the price action and sell-offs, Solana is also grappling with a decline in network activity. The Total Value Locked (TVL) and decentralized exchange (DEX) volume on the Solana blockchain have slipped to pre-election levels, signaling a weakening network. Historically, Solana’s recovery phases have been marked by double-digit growth in TVL and DEX volume, which typically signals a market bottom. However, on March 15, the DEX volume dropped below $1 billion, a worrying sign that the market may not be showing the strength necessary for a turnaround.

If Solana’s DEX volume continues to struggle, and without a noticeable increase in TVL, the chances of a strong recovery diminish further. The absence of strong buying momentum may lead to additional downside risks for SOL, especially if the market sentiment doesn’t shift in the near term.

Negative Sentiment and Controversy

Solana’s woes have been compounded by negative sentiment surrounding the project. Recently, the network faced backlash over a controversial advertisement posted on X (formerly Twitter). The ad received 1.2 million views but fueled significant criticism, leading Solana to delete it. The damage to the project’s reputation and market sentiment was already done, and the negative reaction has only added to the bearish sentiment surrounding SOL.

Moreover, Solana’s Weighted Sentiment, which tracks the overall market mood, has flipped negative. This reinforces the lack of bullish confirmation and further suggests that investors are cautious about the possibility of a meaningful rebound.

The Road Ahead for Solana

In terms of price action, Solana’s chart reflects an ongoing supply-demand imbalance. Despite a 30% monthly decline, the discounted prices haven’t been enough to trigger strong accumulation from traders and investors. The SOL/BTC trading pair has also printed lower lows, recently hitting a two-year low, which suggests that Solana’s relative strength is weakening compared to Bitcoin.

In conclusion, with large-scale sell-offs continuing, network activity declining, and sentiment remaining negative, the chances of a recovery for Solana appear slim in the short term. Unless there is a significant shift in market dynamics and a reversal in sentiment, a further pullback toward the $120 level or lower seems increasingly likely. As of now, Solana faces an uphill battle in regaining key support levels and finding the momentum needed for a rebound.