Solana’s Ecosystem Faces Challenges

Solana (SOL) is experiencing decreased network activity and is bracing for a significant token unlock.

• SOL’s price may dip below the $180 support zone.

Solana (SOL) has struggled over the past few weeks, with recent bearish sentiment across the market impacting the token’s performance. The price of SOL dropped from $256 to $173 within a month, marking a 32% decrease, and further losses may be on the way for this prominent cryptocurrency.

FTX’s bankruptcy estate is set to unlock 11.2 million SOL on March 1, valued at $1.4 billion, as part of FTX’s asset liquidation efforts following its collapse in November 2022. This led to the sale of 41 million SOL to institutional investors, including Galaxy Digital, Pantera Capital, and Figure Markets. Such unlocks are likely to increase volatility and potentially drive prices down.

Controversy Weighing on Solana’s Ecosystem

The recent scandal surrounding the launch and subsequent rug pull of the controversial LIBRA memecoin, which was briefly promoted by Argentine President Javier Milei on social media, has fueled negative sentiment around Solana. As a result, the Argentine flagship index, S&P Merval, fell by 5% following Milei’s now-deleted tweet about the memecoin.

Although the LIBRA memecoin was not the first project launched on Solana’s chain, it led to the resignation of Ben Chow, CEO of the DeFi platform Meteora.

With these issues affecting Solana, it’s no surprise that network activity has declined. The number of active addresses has plummeted well below its January lows, reaching levels not seen since October 2024. While these figures still surpass much of last year, the buzz and trading volume within the ecosystem have significantly dropped. Additionally, total transaction fees have decreased to levels last observed in late December, indicating reduced trading activity.

Despite these challenges, Solana remains a strong long-term player, generating nearly ten times the daily revenue of Ethereum (ETH), although its total value locked (TVL) lags behind.

The current price action depicts a bearish trend. The $180 level has fallen into bearish control, with prices dropping below the $175 Fibonacci retracement level. Although a potential bounce towards the $180-$190 range is conceivable, it’s more likely that prices will fall toward $157 and possibly lower in the coming days due to ongoing bearish momentum.