Solana’s sharp drop comes amid a collapse in on-chain activity, fading demand for meme coins, and fears of a major token unwind
Solana’s native token, SOL, has plunged 40% in the past month, erasing nearly $18 billion in market value between February 14 and 18.
The sell-off comes as investor sentiment weakens, on-chain activity collapses, and fears of further declines mount in what analysts are calling a “perfect storm”.
“The meme coin frenzy that once fueled excitement has cooled, leading to declining investor confidence,” said CoinPanel CEO Aran Hawker in an email interview with Forbes.
“Additionally, on-chain activity has plummeted, with active addresses and transaction volumes sharply decreasing.”
Blockchain analyst Ali Martinez highlighted the sharp decline in Solana’s network activity, sharing Glassnode data on X yesterday.
According to the data, the number of active addresses on the Solana network has dropped from 18.5 million in November to 8.4 million.
The fallout from a recent run on LIBRA, a Solana-based meme coin, has further damaged sentiment. According to crypto auditing tool Bubblemaps and reported by The Kobeissi Letter on X, the token briefly reached a $4.5 billion market cap before crashing 90%.
The situation worsened when Argentina’s President Javier Milei endorsed LIBRA on X, only to delete the post shortly after. After deleting it, he denied any ties to LIBRA, saying he shared it without knowing the details.
“I was not familiarized with the details of the project and after I was, I decided not to continue spreading it (that’s why I deleted the tweet),” he wrote on X.
Adding to the bearish pressure, Solana faces a major token unlock on March 1, which will increase the total supply by 11.16 million SOL.
Some analysts also believe that Bitcoin’s market movement has also played a role in SOL’s decline.
“Since January 2025, Bitcoin topped off at about $109,000, fueled by the first pro-crypto administration in American history and ETF demand,” crypto analyst Wendy O told Forbes.
She noted that Bitcoin has since traded sideways between $94,000 and $104,000, leading to negative price action for altcoins like SOL.
“Unfortunately, with the Argentina Memecoin LIBRA debacle exposing bad actors and builders on the Solana blockchain, the whole industry has been impacted,” she added.
Despite Solana’s recent slump, some investors remain optimistic about its long-term growth in DeFi and NFTs.
However, in the short term, SOL remains under pressure, with further downside possible if on-chain activity fails to recover.
CoinPanel’s Hawker went on to argue that a series of high-profile scams has damaged its reputation, ultimately contributing to the pullback on the asset.
“Together, these elements have created a perfect storm for SOL’s downturn”.
