Solana Slumps: Network Activity Plunges 55% as Price Struggles

In recent days, SOL , the native cryptocurrency of the Solana blockchain, has experienced one of the steepest declines in the industry. Once a favorite among meme coin enthusiasts, Solana now faces a formidable challenge after a significant price fall and reduced network engagement. SOL's value currently hovers around $173, marking a decrease of nearly 10% from the previous week and 15% from a fortnight ago. Over the past month, the token has depreciated by 27.5%.

Last Tuesday saw a sharp 10% decrease in SOL's value within a single day, raising alarm among stakeholders and investors. On-chain analysis indicates that this decline was partly due to the problematic launch of LIBRA, a token currently under scrutiny. The subsequent drop in LIBRA's value generated apprehension among meme coin investors, with SOL bearing the brunt.

The challenges for Solana extend beyond recent price fluctuations. As noted by crypto analyst Ali Martinez, the network is experiencing a pronounced slowdown. A tweet on February 17th revealed a reduction in active addresses to 8.4 million from 18.5 million recorded in November 2024, signifying a 55% drop and suggesting an exodus of developers from the platform. Furthermore, the volume transferred within the network plummeted from $2 billion last November to a mere $26 million, indicating a dramatic 99% decline and highlighting the project's diminished traction.

Market analysts predict further difficulties for SOL in the forthcoming weeks. Approximately 15 million SOL tokens, equating to $7 billion, will be unlocked soon. Coupled with a 4.715% inflation rate, the rise in token supply could exert adverse pressure on SOL's market value.

While there is an upward movement in SOL's current trading, the price remains significantly below its peak levels. The token's market capitalization is approximately $84 billion. Investors are now hoping for the rapid approval of spot SOL exchange-traded funds (ETFs) to bolster confidence.

The previous surge in meme coins on the Solana platform contributed positively to SOL's market activity. However, the pace of new token issuance has markedly diminished in recent months. Earlier, Solana was favored by developers due to its efficient and cost-effective transaction system.

Recent developments have, however, cast a shadow over the platform's reputation, particularly following the launch of SOL-based meme coins such as MELANIA and LIBRA. LIBRA’s launch, which was heavily publicized with support from Argentine President Javier Milei, saw the token peak at $5 post-launch only to crash shortly thereafter. This incident prompted allegations of a "rug pull." MELANIA, alleged to share developmental ties with LIBRA, also faces scrutiny.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered financial or legal advice. Always conduct your own research or consult a professional when dealing with cryptocurrency assets.