Solana (SOL) rose by about 15%, though it only recovered half of its losses during the last days of January and the beginning of February. Its price reached a two-year low of $67.50, and market data shows that chain flows and holder behavior suggest the rally lacks structural support.
The rebound in Solana’s price offered momentary relief for more tactical traders, but it failed to alter the underlying market conditions. Behind the short-term recovery, network and exchange data continued to show a clear imbalance between supply and demand, a factor that historically tends to favor continued downward pressure rather than a sustained recovery.
In particular, on-chain metrics began to reflect a significant increase in available supply just as buying interest was weakening. This combination increased the risk that the rally would function more as a technical pause within a downward trend than as the start of a new upward leg.
One of the most relevant factors was the sharp increase in SOL unlocks. In just a few weeks, the weekly volume of released tokens increased by nearly 150%, abruptly raising the number of tradable units in the market. This additional supply flow came at an inopportune time, when exchange purchases were already showing signs of slowing.
At the same time, the composition of holders changed visibly. The proportion of supply held by very short-term cohorts expanded rapidly, indicating a greater presence of participants geared toward quick moves and early exits.
Increased supply and short-term dominance on the Solana network
Long-term signals also offered little support. Hodler behavior showed a net reduction in exposure, suggesting that more persistent investors opted to distribute positions rather than take advantage of depressed prices to accumulate.
The macro context of the crypto market added further pressure. Bitcoin’s weakness and a wave of long liquidations acted as negative catalysts, amplifying risk aversion. Overall sentiment remained extremely deteriorated, reflecting a market more concerned with preserving capital than taking new positions.
From a technical perspective, analysts identified several staggered resistance zones above the current price, while the market tested key support levels at the lower end of the range.
For market participants, the message is clear. In the short term, volatility may offer tactical opportunities, but the margin for error is small. For longer-term investors, supply dynamics and distribution signals call for caution and a more rigorous risk assessment.
Looking ahead, Solana’s trajectory will depend on observable variables: the progress of unlocks, the behavior of flows to and from exchanges, and a potential shift in overall crypto market sentiment.
