Solana Faces Critical Test at $120 Support Level

As the year draws to a close, Solana (SOL) finds itself navigating significant market pressure. The cryptocurrency is currently trading near the psychologically crucial $120 threshold, a price point that has historically attracted institutional buying interest. Having retreated approximately 58% from its January peak near $294, SOL's recent performance underscores a challenging period. However, the landscape is being reshaped by the approval of spot ETFs, which are generating consistent capital inflows and may help establish a price floor.

A fundamental shift in Solana's investor base followed the U.S. regulatory green light for spot ETFs at the end of 2025. These products have since channeled substantial funds into the asset. December alone saw inflows of $66 million, while a seven-day period in mid-December witnessed cumulative inflows reaching $674 million.

The growing institutional framework includes products like Bitwise's BSOL on the NYSE and 21Shares' TSOL on the Cboe. Invesco recently filed a Form 8-A with the SEC, and Franklin Templeton already offers the SOEZ ETF. This developing ecosystem is viewed as a potential buffer against more severe price declines.

A Clash of Major Market Players

The market is currently a battleground for large investors with opposing views. One prominent whale is managing a 20x leveraged long position, which is now carrying unrealized losses of roughly $5.88 million. The profits from this position have dramatically dwindled, falling from $18 million to just $3 million.

Conversely, a major short seller has systematically realized profits exceeding $27.7 million. The $120 price level serves as the central arena for this conflict. In a contrasting move signaling long-term conviction, the wallet identified as G6gemN purchased 41,000 SOL, worth about $5 million, during the latest price dip.

Underlying Network Health Remains Strong

Despite price weakness, Solana's blockchain fundamentals demonstrate notable resilience:

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

• Total Value Locked (TVL): Stands at $8.8 billion, up from $8.52 billion at the start of the year.
• DEX Volume: Has surpassed $1.5 trillion year-to-date, exceeding Ethereum's $938 billion.
• Stablecoin Supply: Circle minted $55 billion worth of USDC on the Solana network in 2025.

The network has maintained 100% uptime for over 1.5 years, processing transactions in 400 milliseconds with a median cost of $0.001. It has settled more than 200 billion transactions over the past two years.

Real-World Asset Adoption Accelerates

Solana is increasingly establishing itself as a preferred platform for tokenizing real-world assets. Major institutional offerings now operating on its blockchain include BlackRock's BUIDL fund, VanEck's VBILL, and Apollo's ACRED. Payment giant Visa processes $3.5 billion annually over the Solana network. Furthermore, Coinbase has integrated DEX trading for SOL tokens, and CME Group has launched Solana futures contracts.

Technical Perspective and Market Sentiment

Market activity shows signs of cooling. The number of monthly active traders has declined from over 30 million at the end of 2024 to below 1 million. The memecoin sector, once a primary growth driver, has contracted by more than 90%.

From a chart analysis perspective, the next major support level rests at $90, with resistance expected between $134 and $140. A potential trend reversal could trigger a short squeeze, given that roughly $1 billion in short positions are currently open.

The current $120 level coincides with the 200-week exponential moving average (EMA), a zone that has historically prompted institutional accumulation. If this support holds, a move toward $166 could materialize in early 2026. A decisive break below it, however, would bring the $90 support zone into sharp focus.