If your portfolio has Solana like me, then chances are you’re worried about the future of SOL after its recent crash.
Solana has been one of the most talked-about cryptocurrencies in recent years, praised for its speed, low transaction costs, and thriving ecosystem.
However, the past few weeks have been brutal for SOL holders, with the price dropping significantly.
So, what exactly is happening to Solana?
Let’s break down the key reasons behind this downturn and whether there’s a light at the end of the tunnel.
Also read: Why 2025 Could Be Solana’s Biggest Year Yet
Solana’s Recent Price Drop: What’s Happening?
Solana has faced an intense sell-off, with the price tumbling from around $175 to the $160 range, marking a sharp decline of over 9% in just a day.
The broader crypto market is holding relatively steady, so why is SOL under so much pressure?
The answer lies in a combination of factors: declining network activity, upcoming token unlocks, liquidations, and negative sentiment fueled by scam-related controversies.
Let’s go deeper into each of these elements.
1. Network Activity Is Dropping
One of the biggest concerns surrounding Solana right now is the plummeting network activity.
According to data from Ali Martinez, the number of active addresses on the Solana network has dropped from 18.5 million in November to just 8.4 million—a staggering 55% decrease.
The total volume of transactions on the network has also seen a major decline, falling from $2 billion in November to just $26 million.
A drop in active users and transaction volume is never a good sign for a blockchain, as it suggests waning interest and utility. Less activity means fewer fees generated, which impacts the sustainability of the network.
2. The Token Unlocking Event Is Creating Selling Pressure
One of the most significant concerns hanging over Solana right now is the upcoming token unlock event set for March 1.
Over the next three months, more than 15 million SOL tokens—valued at over $7 billion—are expected to enter the market due to scheduled unlocks.
When large amounts of a token are unlocked, investors who were previously unable to sell may decide to cash in, flooding the market with additional supply. If there aren’t enough buyers to absorb the selling pressure, the price naturally declines.
To make things worse, major investment firms like Galaxy, Pantera, and Figure are expected to see unrealized gains in the billions when the unlock occurs, potentially increasing the likelihood of large sales that could further depress prices.
3. The LIBRA Meme Coin Pump-and-Dump Impact
Solana’s ecosystem has been a hotspot for meme coins, but recently, this has backfired. The Solana-based meme coin LIBRA saw a massive pump and dump, triggering a wave of panic-selling across similar assets in the ecosystem.
Many traders who speculated on these meme coins took heavy losses, leading to a cascading effect on Solana’s price as well.
There’s also broader negativity around meme coins in general, with some calling for reform in the space.
Since Solana has been widely used for launching meme coins, a potential shift away from them could reduce demand for the network’s capabilities.
4. Solana Is Losing Ground to Bitcoin and Ethereum
Another worrying sign for SOL holders is that Solana is underperforming against Bitcoin and Ethereum.
The SOL/ETH trading pair has dropped by 28% since early February, suggesting that Ethereum is regaining dominance in the smart contract space.
Additionally, data from LookOnChain shows that $772 million worth of stablecoins have left Solana’s ecosystem in just the past week.
Stablecoin outflows often signal that investors are moving their funds elsewhere, either to safer assets or different ecosystems entirely.
5. Long Liquidations Are Driving Prices Down Further
Futures trading plays a big role in crypto price movements, and for Solana, long positions have been getting wiped out.
Data from Coinglass reveals that SOL futures open interest has dropped by 2.5% to $5.79 billion, while long liquidations have surged to $28.9 million in just 24 hours.
When long positions get liquidated, forced selling occurs, pushing the price down even more. This creates a self-reinforcing cycle where falling prices trigger more liquidations, which in turn drive prices even lower.
Should You Be Worried About Solana’s Future?
Given all these bearish signals, should investors be concerned about Solana’s long-term future? While things look rough in the short term, it’s important to take a step back and look at the bigger picture.
Despite the current sell-off, Solana remains one of the most prominent blockchain networks. It continues to have strong developer activity, and projects are still being built on its ecosystem.
Plus, many past crypto downturns have proven to be temporary setbacks rather than long-term death sentences.
Is Solana a Buy or Sell Right Now?
If you believe the broader crypto market is still in a bull cycle, then Solana’s current dip could be a buying opportunity.
Historically, sharp corrections have been followed by strong recoveries, especially for fundamentally solid projects.
However, caution is still warranted. The upcoming token unlock and weak network activity could keep downward pressure on the price in the short term.
If you’re a long-term believer in Solana, accumulating at these levels could make sense. But if you’re a short-term trader, waiting for signs of stabilization might be the smarter move.
Solana isn’t going anywhere, but the road ahead might be bumpy. Stay informed, manage your risk, and always do your own research before making any investment decisions.
Frequently Asked Questions (FAQs):
Why is Solana’s price dropping?
Solana’s price is falling due to lower network activity, upcoming token unlocks, meme coin issues like the LIBRA scandal, and large holders selling off their SOL.
How has the LIBRA meme coin controversy affected Solana?
The LIBRA meme coin was involved in a pump-and-dump scheme, leading to big losses for investors. This has damaged trust in Solana-based projects and hurt SOL’s price.
What’s the impact of the March 1 token unlock?
Over 15 million SOL tokens will be released into the market, adding $7 billion worth of supply. More tokens in circulation could lead to more selling pressure and lower prices.
Why is Solana’s network activity declining?
Active addresses on Solana have dropped 55% since November, and transaction volume has fallen from $2 billion to just $26 million. Fewer users mean lower demand for SOL.
How are whales affecting Solana’s price?
Large investors (whales) have been selling off their SOL, adding to the downward pressure on the price.
Is Solana losing to Ethereum?
Yes, Solana has been underperforming compared to Ethereum. The SOL/ETH trading pair has dropped 28% since early February, meaning ETH is gaining strength over SOL.
Will Solana recover?
Solana is still a strong blockchain with ongoing development and a solid community. Recovery will depend on user engagement, market trends, and whether sentiment improves.
Hridoy has been deep into the crypto world since 2019, starting with airdrops and later diving into trading and investing. Despite his experience, he still loves the thrill of free mining and believes in helping others earn from it too. Through his insights, he aims to make crypto accessible to everyone.
