Solana at a Crossroads: Key Levels to Watch as 2026 Approaches

As the year draws to a close, Solana (SOL) finds itself at a critical technical juncture, caught between persistent institutional inflows and a notable decline in on-chain activity. This tension sets the stage for a potentially decisive move that could define its trajectory in the coming year.

Despite a challenging price environment, institutional interest, as measured by spot ETF flows, has shown remarkable resilience. On Monday, Solana ETFs attracted nearly $3 million in net inflows, following a week of even stronger figures. Since their launch in late 2025, these funds have accumulated approximately $928 million in assets under management. The Bitwise Solana ETF alone holds over $609 million of this total. A striking pattern emerged in December, with 33 consecutive trading days of net inflows—a clear signal of sustained demand from professional investors.

This institutional accumulation is mirrored by on-chain activity from larger wallets. During a correction on December 18, significant addresses accumulated more than 41,000 SOL, worth around $5 million. This buying coincided with ETF inflows of about $11 million on the same day, suggesting that long-term oriented participants view current price levels as an accumulation opportunity.

Technical Picture Highlights Downward Pressure

Currently trading near $124.50, SOL sits well below its all-time high from January 2025. The token is down almost 47% from its 52-week high, hovering just about 4% above its annual low. The price action remains below the 50-day moving average, confirming the prevailing downtrend.

From a chart perspective, Solana is consolidating within a descending wedge pattern. Such formations can resolve in either direction, with a break above or below the defining trendlines providing the next signal. The $120 zone is widely seen as crucial near-term support. The Relative Strength Index (RSI) reading near 40 indicates ongoing selling pressure but has not yet reached oversold extremes, fitting a market phase characterized by distribution rather than panic.

Sentiment in the derivatives market leans bearish but is not extreme. Futures open interest stands at $7.68 billion and is rising slightly. The short ratio increased to 52.49%, while the funding rate is marginally negative at -0.01%. This setup, while indicating a majority of short positions, also creates the potential for a short squeeze if SOL manages to break key resistance levels and force covering.

Diverging Fundamentals: Ecosystem Strength vs. User Decline

A look at Solana's fundamentals reveals a mixed landscape. A significant drop in network activity has been a focal point for discussion. The number of active traders has plummeted from over 30 million at the end of 2024 to fewer than 1 million per month in Q4 2025—a decline of roughly 97%. Proponents often attribute this sharp fall to the bursting of the memecoin boom that previously drove retail engagement.

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

Conversely, core ecosystem metrics remain robust. Solana continues to lead in several key areas:
* Total Value Locked (TVL): Ranges between $8.8 billion and $18.6 billion.
* Stablecoin Circulation: Nearly $17 billion.
* 2025 Protocol Revenue: Approximately $1.3 billion, ranking it at the top among major blockchains.
* Year-to-Date DEX Volume: Exceeds $1.5 trillion.

Development and partnership news provide further context. At the 2025 Breakpoint conference in Abu Dhabi, Visa highlighted its stablecoin settlement transactions on Solana, which are approaching an annualized volume of around $3.5 billion. Furthermore, R3 is preparing to launch a regulated marketplace for tokenized real-world assets (RWA) in early 2026, adding to several other initiatives in the asset tokenization space.

Critical Levels and Scenarios for Early 2026

Market analysts are weighing technical risks against structural strengths, leading to divergent near-term scenarios. Some see potential for a roughly 15% rebound toward the $134 to $140 range, fueled by the covering of leveraged short positions that could total up to $1 billion.

The bearish case, however, warns of a deeper correction toward the $75 to $51 zone. This scenario would likely be triggered by a significant break below the $105 level, which is viewed by some chartists as the neckline of a potential head-and-shoulders pattern.

As the calendar turns, several key questions will determine the direction:
1. Can the support around $120 hold through the year-end period?
2. Will a daily close above $129 provide the catalyst for renewed upward momentum?
3. Will the positive ETF flow trend persist into January, or will it reverse?

In summary, Solana enters the new year balancing robust institutional inflows, significantly weaker network activity, and palpable skepticism in the derivatives market. Whether this results in a durable bottom or a further correction will likely be decided at the $120 and $105 price levels, alongside the behavior of ETF investors in the opening weeks of 2026.