Solana’s Contradiction: Strong Fundamentals Meet Short-Term Selling Pressure

Solana CRYPTO000SOL

While Solana's price chart shows clear signs of strain, a deeper look reveals a network growing in strength and institutional interest. This divergence between short-term market mechanics and robust on-chain activity defines the current moment for the blockchain.

Significant institutional movements are unfolding. Until January 9, 2026, Solana-focused exchange-traded funds (ETFs) saw capital inflows for eight consecutive weeks, totaling approximately $41 million. In a major development, Morgan Stanley submitted applications for spot SOL ETFs to the U.S. Securities and Exchange Commission (SEC) in early January 2026. Such products are widely viewed as a key mechanism for attracting deeper institutional investment.

Recently, however, this trend has reversed. Net outflows from these Solana ETFs have contributed to the prevailing price pressure, occurring within a broader climate of macroeconomic uncertainty and geopolitical tensions. This combination of risk aversion and position reduction explains much of the recent weakness.

A Closer Look at the Immediate Sell-Off

The asset is currently down roughly 4%, caught in a wider wave of liquidations across cryptocurrency markets. Data from CoinGlass indicates that about $851 million in crypto positions were forcibly closed in a 24-hour window, with long positions accounting for around $786 million of that total.

For SOL specifically, the liquidation activity was heavily one-sided:
* Liquidations of long positions exceeded $20 million.
* More than 95% of all SOL liquidations involved long bets.

Concurrently, the open interest in SOL futures contracts declined to roughly $8.2 billion, indicating that leveraged traders are reducing their exposure and amplifying downward momentum. This price drop was accompanied by a sharp spike in trading volume, with 3 million SOL changing hands in a single hour—more than 200% above the 24-hour average.

Key technical levels are now in focus. The zone between $128 and $130 is considered critical; analysts suggest a sustained break below could trigger further declines toward $122 or lower. Current market data underscores this pressure: trading near $126.79, SOL is just above its 52-week low (approximately 46% below its peak) and about 4% below its 50-day moving average.

On-Chain Metrics Paint a Bullish Picture

In stark contrast to the price action, underlying blockchain data signals accumulating strength.

Major Holders Are Buying

Information from Glassnode reveals a notable increase in large Solana holdings since late November 2025. Addresses holding between 1,000 and 10,000 SOL now control about 48 million tokens, representing nearly 9% of the circulating supply. Meanwhile, addresses with at least 100,000 SOL now hold 362 million tokens, up from 347 million in mid-November—this equates to roughly 64% of the total circulating supply.

The long-term accumulation trend is equally clear. The net position change among long-term holders (Hodlers) has been positive since the end of December 2025, reaching a 15-month high of 3.85 million SOL. A similarly strong pattern of accumulation was last observed in October 2024, immediately preceding a 95% price rally. While history doesn't guarantee a repeat, it indicates that patient investors are currently net buyers.

Exchange Supply Dries Up

Parallel to this accumulation, the amount of SOL available on centralized exchanges is shrinking. Holdings on these platforms dropped by 5 million tokens to 26,058,693 by January 14, 2026—a level not seen since January 2023. A declining exchange supply is typically interpreted as a sign that holders prefer to keep their assets in custody rather than sell them, suggesting underlying selling pressure may be easing even as the price dips.

Network Growth Defies Price Weakness

Beyond price and holdings, Solana's ecosystem demonstrates remarkable vitality.

User and Transaction Metrics Hit Highs

According to Nansen, weekly active addresses reached roughly 27.1 million on January 18, 2026, a 56% increase from the prior week. During that same week, 515 million transactions were processed, placing Solana ahead of all other blockchain networks in both active addresses and transaction count. Daily active wallets approached 2.9 million.

The 30-day view is equally impressive: with about 2.3 billion on-chain transactions, Messari data also ranks Solana first by volume.

Stablecoins and Real-World Assets Flourish

The total value of stablecoins on Solana surged by over 15% in the past week to an all-time high of $15 billion, as reported by Token Terminal. This points to fresh liquidity entering the ecosystem. Furthermore, more than $1 billion in tokenized real-world assets (RWAs) are now deposited on the network, per data from RWA.xyz.

In decentralized finance (DeFi), the Total Value Locked (TVL) stands at just under $10 billion, according to DeFiLlama. Although below the September 2025 peak of $12.2 billion, it still reflects a substantial volume of capital within the ecosystem.

Technical Progress and Proven Resilience

The network's foundation is also advancing on technical and stability fronts.

Firedancer and Alpenglow Advance

Firedancer, a new validator client developed by Jump Crypto, is now running on Mainnet nodes. In testing, this network layer processed over 1,000,000 transactions per second, with the goal of significantly boosting network performance and resilience.

Additionally, a new consensus protocol named Alpenglow is on the horizon, expected by early 2026. It aims to provide near-instant finality in about 150 milliseconds, making it particularly attractive for applications with stringent latency requirements.

Network Withstands Major Stress Test

In December 2025, Solana successfully weathered a massive, week-long DDoS attack that peaked at nearly 6 terabits per second—one of the largest attacks of its kind. Despite this immense load, the network experienced no outage. Blocks continued to be finalized on schedule, and transaction delays remained manageable at under 450 milliseconds. This performance directly addresses past criticisms regarding network reliability and supports the argument that Solana has matured significantly.

Assessing the Current Landscape

In summary, Solana's price action appears to reflect short-term technical weakness and broad market de-risking more than a deterioration in its fundamentals. On-chain data—including record stablecoin balances, declining exchange reserves, strong accumulation by large holders, and high network usage—points to a robust underlying foundation.

From a technical perspective, several price zones remain relevant. Support levels are found around $128, with further levels at $125–$126 and $120. On the upside, $137, $145, and $160 mark potential resistance areas. The trajectory of the current pullback will likely depend on whether the broader cryptocurrency market stabilizes following the liquidation wave or if further risk reduction ensues.