Testing Support at $165 While On-Chain Metrics Turn Positive

TLDR

• Solana (SOL) is trading around $165-$171, down 1.8% in 24 hours but showing potential bullish reversal
• On-chain metrics indicate positive capital inflows and network stability despite recent price decline
• Application revenue surged to $1.2 billion in Q1 2025, a 20% increase from previous quarter
• Short positions are piling up above $170, creating potential for a squeeze if price breaks resistance
• Technical analysis suggests possible breakout above $177-$183 could lead to $190-$200 range

Solana (SOL) is currently trading between $165 and $171, experiencing modest price movements as it tests crucial support levels. Despite a 1.8% decline in the past 24 hours, multiple on-chain metrics suggest a potential bullish reversal could be imminent.

Glassnode data reveals encouraging signs as Solana’s realized cap shows stability following weeks of consistent capital withdrawals. The cryptocurrency’s 30-day capital inflows are turning positive with 4-5% growth, signaling renewed investor optimism despite the recent price drop.

Network activity continues to support this positive outlook. According to analyst Curb.sol, citing Nansen research, SOL now boasts more active wallet addresses than any competing network.

Solana’s transaction volume remains impressive, processing more transactions than all other blockchain systems combined.

This robust network utilization has translated into financial success. Solana’s ecosystem recorded its highest 12-month performance in Q1 2025, with total application revenue exceeding $1.2 billion.

This represents a 20% increase from the previous quarter’s $970.5 million. January alone accounted for approximately 60% of this total.

Revenue Growth Fueled by Meme Coins

Leading the ecosystem revenue race is Meme Coin Launchpad Pump, generating $257 million in income. The Phantom wallet follows with $164 million.

Meme currencies continue to thrive on Solana, challenging narratives suggesting their decline. Projects like $Trump, $Bonk, and $FARTCOIN have seen substantial growth, contributing to the overall ecosystem revenue.

This ongoing success of meme coins has become a key driver for Solana’s economic activity and user engagement.

The platform’s ability to support these popular token projects has strengthened its position in the broader cryptocurrency market.

Technically, Solana is developing a key setup around the $166 support level. After rising to approximately $183 on May 14, SOL has twice tested and held the $166 range with consistent support.

Strong positive candles around this price point demonstrate substantial buying demand. Currently trading between $169 and $171, SOL has gained about 0.70% on the day.

According to Trade City Pro’s analysis, a breakout above either $177.51 or $183.86 could trigger a significant rise toward the $190-$200 range. However, failure to maintain the $166 support might cause a retreat toward $142.25.

Crypto expert Inmortal remains optimistic about Solana’s medium-term future despite the current consolidation. The analyst suggests SOL will temporarily stabilize before rebounding to a new all-time high of $320 in July.

Short Squeeze Potential Emerges

Liquidation data shows a dense layer of overleveraged short positions stacked between $170 and $176. With SOL already hovering around $171, a decisive move above $176 could trigger cascading liquidations, driving further upside.

On May 18, total short liquidations exceeded $1.72 million, while long liquidations remained minimal. This imbalance creates a classic setup where upside volatility could accelerate price movement through forced covering of short positions.

Funding rates on Binance have turned slightly positive at 0.008% after weeks in negative territory. This shift indicates growing willingness among traders to hold long positions, signaling a sentiment change in the market.

Social metrics also support the bullish case. Solana’s Social Dominance has climbed to 5.18%, recovering from a multi-week decline. This uptick suggests renewed interest among retail investors, typically observed during early bullish phases.

Development activity remains strong at 23.38, showing that builder confidence hasn’t wavered despite price volatility. This consistent development helps maintain network fundamentals and supports investor confidence beyond speculative interest.

For now, Solana remains at a crossroads, consolidating above the crucial $166 support. Whether bulls can successfully defend this level and generate enough volume to challenge the upper resistance range will likely determine the next market direction.

With positive on-chain metrics, increasing application revenue, and favorable technical setups, many analysts project Solana could see significant upward movement in the coming months if it overcomes current resistance levels.