Recently, the price of Solana (SOL) has significantly dropped within just a month, falling from nearly $300 in January to the current level of about $170, a decline of over 40%. This drastic price fluctuation has attracted widespread attention both inside and outside the industry. Analysts point out that the recent weakness of Solana is mainly attributed to three factors: first, the ongoing turmoil in the meme coin market, particularly scandals related to tokens like LIBRA, which have continuously impacted investor confidence; second, the "presidential coin" effect has led to some liquidity being withdrawn from the SOL ecosystem; finally, the anticipation of large-scale token unlocks has raised market concerns, creating selling pressure.

1. Turmoil in the Meme Coin Market Impacts Ecosystem Confidence

Solana once rapidly rose to prominence due to the highly controversial meme coin craze, earning the title of "King of Retail Investors" in the market. However, the recent LIBRA incident has cast a shadow over this prosperous scene. After the LIBRA token's price was "pumped" in a short time, early investors began to sell off massively, leading to a sharp price drop and a significant reduction in market capitalization. According to reports from NetEase, the meme coin market within the Solana ecosystem once sparked market controversy, as investors had insufficient awareness of the risks associated with tokens like LIBRA, which in turn affected the healthy development of the entire ecosystem. Industry insiders believe that the rapid rise of meme coins should have brought active funds to the ecosystem, but once scandals or market manipulation occur, it can quickly trigger a crisis of trust, causing a sharp decline in investor confidence. Under such sentiment, the price of SOL has been dragged down, with some short-term funds choosing to exit, further exacerbating the downward price trend.

2. Presidential Coin Effect: Liquidity Withdrawal

Another controversial event related to the meme coin market is the "presidential coin" effect. Former U.S. President Donald Trump launched an official meme coin—$TRUMP—on the Solana chain, which once attracted significant attention from both retail and institutional investors. However, after a brief period of hype, the token quickly declined. Data shows that the $TRUMP coin has dropped significantly from its previous highs, with many participants facing substantial losses, severely impacting market sentiment. Analysts point out that tokens associated with celebrity effects, like presidential coins, often come with high speculation and high risk; once market expectations change, funds can quickly withdraw. The outflow of funds not only affects the token itself but also squeezes liquidity within the entire Solana ecosystem. Some traders have expressed that such events have made them doubt the long-term development of the Solana ecosystem, leading them to focus on other more stable public chain projects.

3. Large-Scale Token Unlocks Trigger Selling Pressure Expectations

In addition to the internal meme coin turmoil and celebrity effects, changes in the overall token supply structure are also an important factor in the current decline of Solana's price. According to several authoritative sources, Solana plans to unlock over 15 million tokens worth approximately $3 billion in the next three months. Among them, the largest batch of 11.2 million SOL tokens is expected to be unlocked on March 1, which will instantly increase the circulating supply of SOL in the market, triggering potential selling pressure. Large-scale token unlocks typically have a short-term negative impact on token prices. Investors are generally concerned that as the unlock volume increases, the market supply will expand sharply, and if funds cannot be absorbed in time, it may lead to further declines in token prices. Some institutions have already begun to adjust their positions, anticipating a more intense selling pressure environment after the unlock.

4. Decline in On-Chain Activity and Technical Challenges

Technical data also shows a significant decline in Solana's on-chain activity and network activity recently. Previously, Solana attracted numerous projects with its high transaction throughput and low transaction fees, but recent data indicates a substantial decrease in the total value locked (TVL) and on-chain transaction volume on the Solana network. Some analysts point out that the instability of the network and frequent security incidents have also weakened investor confidence in the technical advantages of the chain. From a technical perspective, both the 50-day and 200-day moving averages of SOL are trending downward, and it may test the support level of around $155 in the short term. The network's technical team is working hard to optimize system performance, but it may still take time to completely resolve long-standing security and stability issues.

Additionally, some data shows that due to insufficient network liquidity and reduced activity within the ecosystem, the fee burn and transaction frequency of Solana have both dropped to multi-month lows, directly impacting SOL's deflationary mechanism and long-term value accumulation, further putting pressure on the price.

5. Market Sentiment and Investor Confidence Again Undermined

Although some institutions hold optimistic expectations for Solana's future, the overall market sentiment is currently cautious. Many investors express concerns about the chaos in the meme coin market, potential selling pressure after token unlocks, and network technical issues. According to financial information platforms like Investing.com, the short positions on SOL have significantly increased recently, with traders generally bearish on future trends.

The intense fluctuations of short-term funds have made the overall market sentiment exceptionally bleak, leading investors to adopt a more wait-and-see and conservative approach. Some market analysts point out that the current decline of Solana is not caused by a single event but is the result of multiple risk factors overlapping. From a macro perspective, the overall sentiment in the crypto market is constrained by global economic and regulatory uncertainties, and Solana, as a high-profile public chain, is more likely to become a "target" for market sentiment outbursts.

6. Future Outlook

Despite the significant downward pressure currently facing Solana, industry experts believe that Solana still possesses a strong technical foundation and ecological potential. Some analysts point out that in the future, with network optimization, continuous project implementation in the ecosystem, and strategic allocations of funds by some institutions, Solana is expected to gradually restore confidence amid technological upgrades and market recovery.

Additionally, the recent confirmation by the U.S. Securities and Exchange Commission (SEC) to accept applications for Solana spot ETFs from multiple institutions has brought some positive signals to the market.

If the ETF is ultimately approved, it is expected to attract more institutional investors, enhancing Solana's long-term liquidity and market recognition. Meanwhile, some heavyweight investment institutions in the industry have begun to reposition themselves in Solana projects, emphasizing that compared to traditional public chains, Solana still has unique advantages in high performance and low transaction costs. However, experts also remind that whether Solana can truly reverse its decline in the future will depend on its ability to effectively address the chaos in the meme coin market, stabilize network security, and balance the market risks brought by large-scale unlocks. Investors must remain rational and carefully assess risks while paying attention to market opportunities.

Conclusion

In summary, the recent continuous decline of Solana is not coincidental but the result of multiple factors acting together. The chaos in the meme coin market has significantly heightened investors' vigilance regarding the risks of assets within the ecosystem; the outflow of funds triggered by the presidential coin effect has directly impacted liquidity within the ecosystem; and the upcoming large-scale token unlocks have brought enormous selling pressure expectations to the market. At the same time, the decline in on-chain activity and technical security issues have also somewhat weakened the long-term value accumulation of Solana.

In the future, with network optimization, gradual implementation of ecosystem projects, and strategic entry of institutional funds, Solana may still rebound against the trend, but the premise is that it must find a balance amid internal and external pressures and establish a healthier, more transparent, and robust ecosystem. For a broad range of investors, rational judgment, risk diversification, and continuous attention to changes in project fundamentals will be key to coping with market uncertainties.

Disclaimer: The above content does not constitute investment advice.

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