Solana Tests Critical Support Amid Market-Wide Sell-Off

A promising November for Solana has given way to a stark December reversal. After a month characterized by institutional inflows and robust network metrics, SOL’s price tumbled sharply on December 1, 2025, plunging 10% from approximately $140 to a low of $124. This dramatic move has market participants debating whether it represents a standard market correction or the initiation of a more sustained downtrend.

Macroeconomic Headwinds Fuel Crypto Sell-Off

The pressure on Solana was part of a broader cryptocurrency decline. On the same day, Bitcoin briefly fell below $86,000, Ethereum shed over 7%, and major altcoins including Dogecoin and Cardano posted double-digit losses. Two primary macro forces are driving the volatility.

First, the Bank of Japan unexpectedly signaled a potential interest rate hike, a move that threatens the popular Yen carry trade and typically weighs on risk assets globally. Second, the market remains jittery from the ongoing unwinding of highly leveraged positions. This follows massive liquidations in October that saw over $19 billion in positions forcibly closed. The prevalence of extreme leverage—reaching up to 200x on some exchanges—continues to amplify price swings.

Institutional ETF Flows Reverse After Record Streak

A key pillar of Solana’s recent strength showed signs of cracking just before the price drop. Spot ETFs tied to SOL had recorded 21 consecutive trading days of inflows, a powerful vote of confidence from institutional investors that brought in roughly $419 million throughout November. However, this streak ended abruptly on November 28, when these products saw their first outflow of $8.1 million.

Market analysts view the reversal in ETF momentum as a significant, though potentially short-term, shift in institutional sentiment. The timing of this shift, followed closely by the sharp price decline, is unlikely to be coincidental.

Robust Fundamentals Contrast with Price Action

Interestingly, Solana’s weakening price stands in stark opposition to its strong on-chain and ecosystem activity. As of late November, the network was processing about 71 million daily transactions across more than 2.3 million active addresses. Its transaction speed remains a key differentiator, handling an impressive 870 transactions per second (TPS), compared to Ethereum’s roughly 30 TPS and Bitcoin’s approximately 7 TPS.

Should investors sell immediately? Or is it worth buying Solana?

The decentralized finance (DeFi) sector on Solana also remains resilient. The Total Value Locked (TVL) hit around $10.2 billion in mid-2025. Furthermore, in a significant endorsement of the network’s infrastructure, Western Union has announced plans to launch its USDPT stablecoin on Solana in 2026.

Technical Picture Points to Further Downside Risk

From a chart analysis perspective, Solana is currently testing a critical juncture. Essential price support lies in the $125 to $127 range—precisely where the asset is now trading. A decisive break below $121.66 could trigger the next leg down, with analysts identifying potential targets between $95 and $105.

Technical indicators largely reinforce this cautious outlook. The price is trading below its 50-day moving average, the Relative Strength Index (RSI) has touched overbought territory, and the Chaikin Money Flow is signaling notable capital outflows. Elevated trading volume—approximately 25% above the weekly average—suggests that institutional players are actively distributing their holdings.

Breakpoint 2025 Conference Emerges as Potential Catalyst

A near-term source of potential optimism is the upcoming Breakpoint 2025 conference. Scheduled for December 11-13 in Abu Dhabi, this flagship Solana community event is anticipated to feature major announcements, including updates on the Alpenglow upgrade and progress on the alternative validator client, Firedancer.

Historically, such gatherings have acted as catalysts for price recoveries. The central question for investors is whether the positive news flow from the event will be sufficient to counteract the current bearish technical and macroeconomic pressures.

As 2025 draws to a close, Solana finds itself at a crossroads, caught between strong fundamental growth and significant technical selling pressure. The coming weeks will determine whether robust network activity or weakening capital flows will dictate its near-term trajectory.