If $80 Breaks, $50 Next… Fears of Solana ‘Death Spiral’ Spread

▲ Solana (SOL)/AI-generated image ©

Solana (SOL) is teetering around the $81 level, gripped by fears of a potential “Death Spiral” that could drag the price down into the $50 range. While declining ecosystem revenue and weakening technical indicators are intensifying selling pressure, institutional investors are instead stepping in to buy the dip through spot ETFs, highlighting sharply divided market sentiment.

According to investment media outlet FXLeaders on February 19 (local time), Solana fell 3.4% over the past day and is currently locked in a tight standoff near $81. Experts warn that despite active on-chain activity, weakening technical structure could push the price down to the $50 level.

A clear bearish signal in the form of a head-and-shoulders pattern has appeared on the weekly chart, with the breakdown of the $120 neckline in January marking the start of a full-fledged downtrend. Based on this pattern, the technical target is projected at $57. On the daily chart, SOL is also testing the lower boundary of a bearish flag pattern around $80. If this support level breaks, there is a significant risk of a plunge of about 40% from current levels to the $48–$50 range. The Relative Strength Index (RSI) stands at 33.2, indicating oversold conditions, but the Average Directional Index (ADX) has surged to 28, suggesting the downtrend is strengthening.

The price decline has fueled concerns of a death spiral, as reduced liquidity provider rewards and staking yields could accelerate capital outflows. Decentralized application revenue, which reached an all-time high of $146 million on January 1, 2026, has plunged to $22.8 million, the lowest level in recent years. Although Solana benefited from strong revenues driven by retail enthusiasm for meme coins such as Pump.fun, this dependence has made it more vulnerable to sell-offs during periods of market instability.

In contrast, institutional investors’ actions stand in stark opposition to prevailing market pessimism. U.S.-based Solana spot ETFs have recorded net inflows on 66 out of 74 trading days since listing, attracting a total of $877 million, led by Bitwise products. Meanwhile, the Market Value to Realized Value (MVRV) ratio has fallen below 0.8, a level historically associated with extreme undervaluation. In Solana’s trading history, such levels have occurred only within the bottom 5% range and have previously preceded multi-month rallies.

Ultimately, Solana’s short-term fate hinges on whether it can defend support between $78 and $80. If this critical level collapses, the price could retreat to the $50–$65 range, where buyers were concentrated during the 2022 bear market. Conversely, if institutional demand supports the price and pushes it above $92, a short squeeze driven by the liquidation or covering of short positions could trigger a rebound rally toward $120 by mid-2026.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses resulting from reliance on this information. The content should be interpreted for informational purposes only.*