Solana (SOL) has dropped by 6.5% in the last 24 hours to reach around $127 on March 17, mirroring losses across the cryptocurrency market.

The top reasons driving the SOL prices lower today include:

• Decreasing investor interest in SOL’s decentralized finance (DeFi) ecosystem.

• Decreasing open interest and negative funding rates.

• Technicals suggest a possible further drop in SOL price.

Solana TVL hits four-month lows

SOL’s price drop today is preceded by a drop in the total value locked (TVL) in its DeFi applications, as per data from DefiLlama. 

Key points:

• Solana’s TVL has been in a downtrend since mid-January. 

• This metric fell by 45.5% from $12.1 billion on Jan. 19 to $6.63 billion on March 11.

• The TVL now stands at $7 billion on March 17, 41% below the Jan. 19 peak.

• This drop in TVL occurred in tandem with the decrease in SOL’s price, which is down 56% over the same period.

• Several layer-2 protocols, such as Jito and Raydium, have posted 30% and 32% drops in TVL over the last 30 days.

• The declining TVL reflects traders’ waning interest and could be a sign that Solana struggles to attract new users despite its lower traction costs.

Solana’s price slump is also supported by a decline in onchain activity within the Solana ecosystem, according to the data provided by Dune dashboard Pump.fun. 

What to know:

• A sharp drop in the number of network transactions preceded SOL’s price drop on March 17.

• The amount of daily transactions on the Solana blockchain has dropped from an all-time high of 71,738 on Jan. 23 to 24.505 on March 17, as shown in the chart below.

• This indicates decreasing network activity, resulting in lower revenues from fees. 

• This negatively affects SOL’s price, partially explaining the ongoing correction.

Solana funding rates remain negative

Solana's open interest (OI) is decreasing, and its funding rates are negative, which provides insight into why SOL’s price is struggling.

Key points:

• Solana’s OI in the futures market has dripped from its local peak of $8.57 billion on Jan. 17 to $4.03 billion as of March 17.

• OI measures the total number of outstanding futures contracts, and a decrease suggests more traders are exiting positions.

• A declining OI typically means reduced speculative demand, slowing upward price momentum.

• SOL’s weekly funding rates remain negative at -0.10% on March 17, four months after peaking out at 1.37%.

• Negative funding means shorts are paying longs to keep their positions open.

• OI decline and negative funding rates show a lack of confidence in SOL’s short-term price action.

Related: Solana’s 5th birthday: From pandemic origins to US crypto stockpile

SOL price could drop another 35%

SOL trades 56% below its all-time high of around $294, established on Jan. 19, and chart technicals suggest that there’s more room for the downside over the next few weeks.

Key levels to watch:

• The altcoin has been trading above the $120 level, but the bulls have failed to push the price above $135.

• If the price slides below $120, the SOL/USDT pair could drop to the $110 range low (established on Aug. 5, 2025). 

• This is a critical support to watch out for because a break and close below it may start a downward move to $100 and then to $80.

• Such a move would represent a 35% drop from the current price.

• However, a positive divergence from the RSI shows that bulls have been accumulating SOL at lower levels.

• A break and close above the $140 psychological level will suggest that the selling pressure is reducing. 

• The pair could rally to the 50-day simple moving average at $171, where the bears are expected to mount a strong defense.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.