Is Solana ready to bounce back, or is Q2 echoing its Q1 slump?

• Solana’s sharp decline in Q1 has raised issues concerning the asset’s future route.
• And not using a clear catalyst for restoration, additional draw back could possibly be on the desk.

Solana [SOL] kicked off 2025 with a tricky Q1, dropping 34% and shedding $100B in market cap, wiping out all of the positive factors from the pre-election hype.

Now, again to its September 2024 low, will Q2 be any totally different, or is the chance of high-stakes sell-offs nonetheless too sturdy?

Threat of capitulation grows as FOMO fades

Solana, like many high-cap belongings, has struggled because of a mix of macro and microeconomic components. Nevertheless, its Q1 downturn stands out as probably the most extreme amongst main belongings.

From a technical perspective, Solana’s 1D value chart lacks clear help ranges. With out sturdy bullish demand at key ranges, the asset faces a excessive threat of additional declines, particularly if HODLing sentiment weakens.

On the time of writing, Solana’s  has reached a two-year excessive, with solely 32% of the provision in revenue. This imbalance will increase the probability of a sell-off, as underwater holders could also be extra inclined to capitulate.

The Internet Unrealized Revenue and Loss (NUPL) metric signifies that Brief-Time period Holders (STH) have entered a capitulation section. This might set off a wave of sell-offs. 

If the broader market fails to get better quickly, Solana’s community might expertise vital liquidity outflows.

Supply: Glassnode

Traditionally, Solana has solely discovered a neighborhood backside when it enters the hope/concern section, the place FOMO kicks in and market confidence returns. With out this shift, sell-side pressure may proceed, and the chance of additional declines stays.

Including to the bearish outlook, the SOL/BTC pair has erased its mid-March positive factors, with a pointy weekly decline.

At press time,  the MACD was on the verge of flipping bearish, signaling that SOL may quickly take a look at its $115 help.

Can Solana flip it round in Q2?

Solana began Q1 sturdy, with new addresses surging to eight million by mid-January, however momentum has sharply declined, and the rely has dropped to a six-month low of simply 312k.

Supply: Glassnode

Earlier within the quarter, Solana noticed spectacular spikes in staking and DEX volume, signaling wholesome investor engagement. Nevertheless, each metrics have since fallen considerably, dropping nicely under their pre-election highs.

With rising capitulation fears and an absence of spot accumulation, Solana is prone to shedding the $115 help.

Until there’s a shift in sentiment or a catalyst to spark demand, anticipating a bullish Q2 appears more and more too far- fetched.