Since January, Solana has retraced more than 50% from its all-time high of $295, driven by the decline in meme coin market activity.
Reasons for Solana's Decline
In January, Solana reached its peak at $295, but in the past month, the cryptocurrency's value fell by 38%. The decline is mainly due to the reduction in meme coin trading activities that previously contributed significantly to Solana's on-chain volume.
Decline in Trading Volumes on Pump.fun
On Pump.fun, Solana's meme coin trading platform, 8.1 million tokens were minted, generating $577 million in fees. However, trading activity has sharply decreased: on February 25, the trading volume was $89.5 million, which dropped to just $5.03 million on February 26, a 94% drop in a single day. Data indicate that most meme coins have lost 80–90% of their value.
Overall Trends and Prospects
The decline in meme coin activity has also impacted Solana's decentralized finance ecosystem. As a result, Solana's TVL has decreased from $12 billion to $7.13 billion, indicating significant financial losses. Many users are migrating to other networks like Ethereum, Arbitrum, and Sonic. SOL is currently trading at $142, and investors are struggling to maintain this level. An upcoming 11.2 million token unlock on March 1 could further pressure SOL's price.
Without recovering the $150 mark and witnessing an increase in TVL and on-chain volumes, Solana's growth prospects remain uncertain. The future approval of a Solana ETF is also unlikely in the near term, reducing the chance of institutional interest in the cryptocurrency.
