Solana Faces Major Decline Amidst Slowing Memecoin Activity
Solana (SOL) has seen a critically important drop,retracing over 50% from its peak of $295 in January. The cryptocurrency experienced its worst monthly performance as the FTX collapse in november 2022, falling 38% in the last 30 days.
One major factor behind this decline is the slowdown in memecoin trading activity. Previously, memecoins contributed greatly to Solana’s on-chain volume. As of February 26, 8.1 million tokens were minted on Pump.fun, Solana’s memecoin trading platform, generating $577 million in fees. However, trading volume has decreased by 94% in a single day, from $89.5 million on February 25 to just $5.03 million on February 26.
This decline has affected Solana’s decentralized finance ecosystem. According to DefiLlama, Solana’s Total Value Locked (TVL) has dropped from $12 billion in mid-January to $7.13 billion, losing $5 billion in less than a month. Raydium, a decentralized exchange, has seen a 50% TVL drop in the last 30 days.
Capital is also moving to other networks like Ethereum (ETH),Arbitrum (ARB),and Sonic (SONIC) as Solana’s activity wanes.SOL is currently trading at $142, down 15% in the last 7 days. Bulls are struggling to establish a support level, with $140 acting as a key threshold.
An upcoming 11.2 million token unlock on March 1 could further pressure SOL.Additionally, the low chance of a Solana ETF being approved soon lessens the likelihood of an institutional trigger happening right away. SOL needs to recover the $150 mark and witness a resurgence in TVL and on-chain volumes to resume its bullish momentum.
