SOL's Bear Flag Formation Warns of Further Weakness Ahead

Solana (SOL) has staged a sharp correction from its August peak, shedding approximately 50% of its value as bearish technical patterns intensify. The token currently trades around $139.03, having retreated substantially from the $252.55 August high, raising questions about whether further downside pressure may unfold.

Technical Setup Confirms Bearish Continuation Pattern

The daily chart presents a concerning technical picture for Solana bulls. SOL has carved out a distinctive bear flag formation—a recognized continuation pattern that typically signals extended weakness in the direction of the prior downtrend. Most critically, the price has already slipped beneath the lower boundary of this pattern, effectively confirming a bearish breakout.

This technical confirmation suggests that sellers could target the psychological $100 level, representing an additional 20% decline from current prices. Throughout this correction, SOL has maintained a position below key moving averages, reinforcing the downtrend’s technical authority.

On-Chain Activity Shows Mixed but Weakening Signals

Network vitality indicators paint a picture of cooling engagement across the Solana ecosystem:

• Transaction throughput has contracted by 10% over the past 30 days, landing at 1.79 billion transactions. Despite this pullback, Solana retains its position as the industry’s most active chain, still processing more transactions than the next five networks combined.

• Active wallet participation slipped 5.7% to reach 60.1 million addresses, suggesting a modest decline in regular network users.

• Transaction fees experienced the sharpest deterioration, tumbling 21% to $14 million—a notable compression that reflects reduced trading intensity and activity throughput.

Capital Retrenchment Across DeFi Infrastructure

Total value locked (TVL) in Solana protocols has contracted to $18.57 billion, marking a substantial retreat from the year-to-date high of $30 billion. However, there remains a sliver of optimism: TVL measured in SOL terms has continued climbing, suggesting that while dollar-denominated capital has departed, the native token-based commitment to the ecosystem persists.

Broader market dynamics underscore this retrenchment. Adjusted transaction volume compressed 30% to $238 billion, while the holder count fell 9% to 3.4 million. Stablecoin inflows to exchanges have weakened from November’s $94 billion to $85 billion currently, indicating reduced buying conviction across the sector.

The Verdict

Solana’s technical setup, combined with measurable on-chain contraction, suggests the ecosystem faces near-term headwinds. While the network maintains its operational dominance, the price action and chart patterns indicate that $100 remains a plausible target in the absence of renewed bullish catalysts.