Ah, Solana. The darling of the crypto world, now limping like a wounded gazelle. Between Feb. 14 and Feb. 18, SOL, its native token, took a 17% nosedive, landing unceremoniously near $164. Coincidence? Hardly. Enter the Libra memecoin, a spectacle involving Argentina’s President, Javier Milei, which crashed 83% after early investors cashed out faster than a cat fleeing a bathtub. 🐱💨
But to blame SOL’s $18 billion market cap loss solely on a memecoin pump-and-dump is like blaming a hangover on the last sip of vodka. Solana’s decentralized finance (DeFi) applications were already gasping for air, with declining volumes and deposits ahead of a major token unlock. And let’s not forget, memecoins were merely following SOL’s lead, not driving it. 🚗💨
While memecoins didn’t directly cause SOL’s decline, traders seemed to have lost their appetite for decentralized exchanges and new project launches. The dwindling influx of participants and onchain activity hit SOL’s price harder than a sledgehammer to a piñata. 🎯
Solana DEX volumes declined by 91% in 30 days
From a peak of $35.5 billion in daily volume on Jan. 17, Solana’s onchain activity plummeted to a measly $3.1 billion by Feb. 17. The initial surge was fueled by the Official Trump (TRUMP) memecoin, which reached a $15 billion market cap after a public endorsement from none other than US President Donald Trump. 🦅
Despite Solana’s 20% weekly decline in DEX volume, competitors like BNB Chain thrived, gaining 35% over the past week. Thena, Uniswap, and DODO were the stars of the show, with volumes doubling, growing 61%, and surging 53%, respectively. Solana, meanwhile, was left holding the bag. 👜
Solana TVL drops 19% in 2-weeks ahead of large SOL unlocks
Deposits on Solana’s decentralized applications (DApps), measured by total value locked (TVL), also took a hit. This metric, largely unrelated to memecoin trading and token launches, is dominated by liquid staking, perpetual contracts, and yield platforms. 📉
Over two weeks, deposits on Solana DApps dropped by 19%, driven by net outflows from Jito, Kamino, Marinade Finance, and Sanctum. Only a few projects, like Meteora and Drift, managed to increase their TVL. Meanwhile, Ethereum’s TVL declined by 2%, and BNB Chain grew by 8%. Venus and Kernel were the standout performers on BNB Chain. 🌟
If the Libra memecoin launch were the primary cause of SOL’s underperformance, one would expect a more significant impact on Solana’s onchain metrics. But alas, that was not the case. 🕵️♂️
Another headache for SOL holders is the heavy unlocking schedule for the first quarter of 2025. Over 15 million SOL, worth more than $2.5 billion, are expected to enter the circulating supply. That’s 12 times the amount unlocked in the previous quarter. Talk about a floodgate opening. 🌊
In the end, SOL’s underperformance can be chalked up to a drop in onchain trading activity and a decrease in DApps TVL, a trend that had been brewing for weeks before the Libra memecoin’s debut. The looming large SOL unlocks only added fuel to the FUD fire, pushing SOL’s price to its lowest levels since November 2024. 🔥
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of CryptoMoon. 🌕
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2025-02-18 23:05