Solana's Costs Sink by 40% in a Month, with a 'Formidable Tempest' Amplifying Deficits
Solana's token, SOL, has seen a significant drop in price, plunging over 40% in just a month. This downturn was highlighted by Coinbase data from TradingView, which showed SOL trading at almost $160 on February 18, a significant fall from its peak of approximately $290 on January 19.
Aran Hawker, CEO of CoinPanel, described this price drop as a "perfect storm" due to several converging factors. Firstly, the hype surrounding meme coins has waned, leading to a decline in investor confidence. Secondly, on-chain activity has plummeted, with active addresses and transaction volumes decreasing sharply.
To support this argument, blockchain analyst Ali (@Ali_charts) shared a Graph from Glassnode showing a significant drop in the number of active addresses on the Solana network. From over 18.5 million in late October, the number of active addresses declined to less than 8.4 million on February 15.
Joe DiPasquale, CEO of BitBull Capital, also noted that these developments have reduced both engagement and demand. Furthermore, recent developments involving LIBRA coin also added to the bearish pressure on SOL prices. The LIBRA coin, a project that amassed a market capitalization of $4.5 billion, subsequently lost 90% of its value, according to CoinDesk.
Argentina President Javier Milei endorsed this digital asset, tied to a project named Libra, on Twitter. However, he later deleted the post. This event undermined investor confidence in Solana-based projects, according to DiPasquale.
Another significant factor contributing to this bearish pressure is the March 1 token unlock, which will increase the total supply of SOL by 11.16 million. This increase in supply could put downward pressure on the price of SOL, as investors might sell their holdings. Compounding these issues, Solana's association with high-profile scams has tarnished its reputation, further exacerbating the bearish sentiment.
A market observer, Wendy O, from TikTok, offered a different perspective, suggesting that Bitcoin's price action and the LIBRA situation have also impacted other digital currencies. Since Bitcoin peaked at around $109,000 in January 2025, it has been trading sideways between $94,000 and $104,000 on the weekly chart. This price action has adversely affected other digital currencies, including Solana.
In conclusion, the recent price drop of SOL can be attributed to several converging factors, including declining investor confidence, plummeting on-chain activity, and the upcoming token unlock, which could increase the total supply of SOL. The meme coin frenzy and recent developments involving LIBRA coin have also contributed to bearish pressure. Furthermore, Solana's association with high-profile scams has tarnished its reputation, adding to the bearish sentiment.
- Due to the decreasing prices of Solana's cryptocurrency, SOL, layoffs have been reported in some digital currency-related companies.
- Investors have been selling off their Solana digital assets due to the significant drop in Solana prices, which has been impacted by various factors.
- The price of Solana's digital currency, Solana, has fallen below $160, which is a far cry from its peak price of approximately $290, affecting the overall cryptocurrency market.
- Digital currencies, including Solana, have been negatively impacted by Bitcoin's price action staying between $94,000 and $104,000 on the weekly chart since January 2025.
- Despite Argentina President Javier Milei endorsing a digital asset tied to a project named Libra on Twitter, the bearish pressure on Solana-based projects has not subsided, causing investor confidence to continue decreasing.
