Solana Capitulation Echoes 2022 Bear Market Price Setup

Solana price remains under sustained pressure, extending a three-week downtrend amid weak investor support and bearish macro conditions. 

SOL trading near $80, reflecting declining demand across the broader crypto market. Adding to concerns, long-term holders are now showing signs of weakening conviction.

Sponsored

Sponsored

Solana Profitable Supply Falls To Multi-Year Low

On-chain data shows that Solana’s supply in profit has dropped to 15%. This marks the lowest level since November 2022. A falling profitable supply typically indicates that most holders are underwater, which often reduces the incentive to sell further.

Historically, such low profitability has coincided with stabilization phases. Selling pressure tends to ease when fewer investors remain in profit. However, current conditions differ due to broad market weakness and deteriorating long-term holder sentiment, limiting the usual recovery effect.

Want more token insights like this? Sign up for Editor Harsh Notariya’s Daily Crypto Newsletter here.

A key metric highlighting the shift is Liveliness, which measures long-term holder activity. The recent spike in Liveliness signals increased token movement from previously dormant wallets. This behavior suggests Solana LTHs are distributing rather than accumulating during the downturn.

When LTHs begin selling, macro momentum often weakens further. Their participation typically reflects high conviction. A sustained rise in Liveliness indicates eroding confidence, which can amplify bearish trends and reduce the probability of a swift Solana price recovery.

Sponsored

Sponsored

Why Are LTHs Selling?

Signs of LTHs selling became evident toward the end of January. The long-term holder Net Unrealized Profit and Loss, or NUPL, fell below zero. This shift marked capitulation, meaning long-term holders moved into aggregate losses.

The last time Solana LTH’s NUPL dropped below zero was in May 2022. Capitulation at that time triggered widespread distribution before eventual stabilization. Selling by long-term investors during loss phases often reflects psychological exhaustion rather than tactical repositioning.

LTHs capitulated on January 24, yet the spike in Liveliness appeared roughly a week later. This delay suggests holders initially waited for a rebound. But as the Solana price continued to decline, those investors ultimately sold. If this dynamic persists, recovery prospects may weaken further.

SOL Price Downtrend Continues

Solana price trades near $80 and remains within a defined downtrend that began three weeks ago. SOL is holding just above the $79 support level. Sustained weakness in investor demand increases the risk of a breakdown below this threshold.

If LTH selling continues and the downtrend remains intact, SOL could lose $79 support. A confirmed breakdown may send Solana toward $70, which aligns with the 1.786 Fibonacci extension level. That zone represents the next major technical support.

Alternatively, a halt in long-term holder selling could improve momentum. If SOL breaches the descending trendline and clears $88 resistance, recovery may accelerate. A move toward $95 would invalidate the bearish thesis and signal renewed bullish strength in Solana price action.