Solana (SOL) has faced significant challenges in recent weeks, with the cryptocurrency losing over 56% of its value from its peak in January 2025. The recent market volatility has raised concerns that SOL may be on the verge of a significant price decline. After a 2% drop in the past 24 hours, Solana is currently trading near $123.50, and technical indicators suggest that it may struggle to maintain its current levels.

The market sentiment surrounding Solana has turned bearish, with a combination of technical patterns and market activity indicating a potential decline of up to 37% if certain price levels fail to hold.

Bearish Patterns Forming on the Chart

Solana’s price chart has recently formed two concerning patterns: a bearish flag-and-pole formation and a head-and-shoulders pattern. These chart formations are often signals of a continuation of the downtrend.

The bearish flag-and-pole pattern suggests that SOL could experience further downward momentum after a brief consolidation period. This pattern is typically followed by a price drop once the consolidation ends, and the breakout occurs. In addition, the head-and-shoulders pattern, which is a reversal signal, has formed on the daily chart. The neckline of this pattern is positioned at $118, making this level crucial for determining the next move in Solana’s price.

If Solana fails to hold the $118 support level, it could face a sharp decline to test the next major support at $77, representing a 37% drop from its current value. The price of SOL has already shown weakness, and breaking below this critical support would confirm the bearish trend.

Key Levels to Watch

The $118 level is the key to Solana’s near-term future. If the price drops below this threshold and closes a daily candle under $118, it would confirm a bearish trend, pushing the price toward lower levels. The next support zone is at $112, where SOL has historically found support during price pullbacks. However, considering the current negative market sentiment, a reversal at this level is uncertain.

On the upside, if Solana manages to hold above $118 and rally, it may face resistance at $128. If the price breaks above $128, it could provide some relief for bulls, but that would depend on a significant shift in market sentiment. At present, the price remains below the 200 Exponential Moving Average (EMA) on the daily chart, signaling that the trend is still bearish.

Traders Betting on a Bearish Outcome

Traders’ behavior further suggests a bearish outlook for Solana. According to data from Coinglass, there are $127 million worth of short positions on SOL, showing that many traders are betting against the cryptocurrency. The shorts are concentrated at the $128 resistance level, indicating that traders believe Solana will struggle to rise above this point.

Conversely, the long positions on Solana are much smaller, reflecting the cautious sentiment among investors. This heavy bearish positioning is likely contributing to the downward pressure on Solana’s price, reinforcing the possibility of further declines.

Whale Activity and Potential Accumulation

Despite the bearish sentiment, large investors, known as whales, have been showing interest in Solana. Recent data from Coinglass reveals that exchanges have seen a $9.15 million outflow of SOL in the past 24 hours, suggesting that whales are accumulating tokens during the current dip. While this could provide some support for Solana’s price, it may not be enough to reverse the broader market trend unless there is a larger shift in sentiment.

Conclusion

Solana is at a critical juncture. The $118 level is key, and if SOL fails to hold this support, it could face a 37% drop to $77. With bearish patterns on the chart, a significant amount of short positions, and weak market sentiment, Solana’s outlook remains uncertain. However, whale activity and accumulation suggest that some buyers are still interested, potentially preventing an even larger decline. Traders and investors should watch closely for price action around these key levels to determine if a recovery is possible or if further downside is imminent.