Solana price has crawled back this week, continuing a trend that has been going on since March 12 when it crashed to $112.50. It has soared to a high of $142.50, its highest level since March 7 last year. This article explains whether the SOL price will bounce back, possibly hitting the critical resistance at $200.
Solana meme coins and reputation issues
The main reason why Solana price crashed from $290 in February to $112 this month is that it went through a substantial reputation damage.
For a long time, Solana had a good reputation as being a good chain supporting key industries like decentralized public infrastructure networks (DePIN), decentralized finance (DeFi), decentralized science (DeSci), and non-fungible tokens (NFTs).
Things changed since last year when Solana became a popular name in the meme coin industry. This issue accelerated after the launch of meme coin generators that helped people to create their meme coins within minutes.
Solana took advantage of these meme coins and made a fortune as the number of transactions rose. Data shows that Solana made over $44 million in one week in January. It has now made over $360 million in fees this year, much higher than Ethereum.
The challenge, however, is that these meme coins damaged Solana’s reputation because of the common rug-pull schemes. This happened when developers launched their meme coins, pumped them, and then dumped them.
A good example of this was Libra coin, whose market cap jumped to over $4 billion and then crashed within hours. Javier Milei, Argentina’s president, promoted it.
Donald Trump’s Official Trump token also surged and pushed its market cap to over $14 billion and then plunged.
Solana meme coins have crashed in the past few months, with the market cap dropping from over $30 billion in January to $8 billion today.
Read more: Solana plunges over 50% from all-time high as memecoin trading activity fades
SOL metrics have worsened
The recent Solana metrics have worsened. Data compiled by TokenTerminal shows that Solana has made $23 million in fees this month, down from over $252 million in January and $85 million in February.
Solana’s revenue dropped from $126 million in January to $3 million this month. More data shows that monthly users have dropped to 67.8 million this month from 97 million in January.
It is unclear whether Solana will regain these users since many of them will likely avoid Solana meme coins.
For Solana to rebound, its meme coins ecosystem will need to bounce back. Some of them have already done that, with Popcat, Fartcoin, Dogwifhat, Cat in a dogs world, and Peanut the Squirrel soaring by over 20% in the last seven days.
Solana price technical analysis
The daily chart shows that the SOL price bottomed at $120.50 this month. This was an important level since it struggled to move below it many times since April last year. That is a sign that it formed a giant quadruple bottom whose neckline was at $296.
A quadruple bottom is one of the most bullish patterns in technical analysis. Solana has also formed a bullish divergence pattern as its oscillators have continued rising. That is a sign that the coin will continue rising for a while.
However, Solana price has also formed a rising wedge pattern, which comprises two ascending and converging trendlines. Therefore, there is a risk that the coin will resume the downtrend soon.
More Solana downside will be confirmed if the SOL price drops to the key support at $120. Such a crash will see it drop to the next key point at $100.
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