Solana’s Price Faces Further Decline Amid 41% Drop in TVL and Memecoin Market Cap Losses

  • Solana’s recent price downturn reflects a broader trend of reduced investor confidence amid significant losses in both memecoin activity and total value locked (TVL).

  • The total TVL on Solana has dropped a staggering 39.2% over the past month, prompting concerns about the network’s stability and future.

  • According to data analysis from DefiLlama, the decline in Solana’s TVL parallels a dramatic 68% fall in the memecoin market cap.

Solana’s TVL tumbles 39.2% and memecoin market cap crashes by 68%, signaling waning investor confidence amid ongoing price drops.

Solana’s TVL Plummets by $5 Billion Within a Month

The total value locked (TVL) in Solana-based decentralized finance (DeFi) applications has witnessed a steep decline of **39.2%** in just 30 days. This marks the most significant decrease since the notorious meltdown of the FTX exchange in November 2022. As of now, Solana’s TVL has shrunk from an impressive **$12.1 billion** on January 24 to a mere **$7.4 billion**, raising alarm among investors and industry analysts alike.

TVL is a critical indicator of investor sentiment in the DeFi space, representing the **total value of all assets locked into various protocols**. A rising TVL typically reflects growing investor trust and capital influx into the ecosystem, whereas declining TVL may suggest a loss of confidence, triggering capital outflows from the network.

Solana’s recent downturn is notably influenced by a significant reduction in activity on **Raydium**, a leading decentralized exchange (DEX), which reported a **53% reduction** in TVL. Other notable DeFi applications like **Jupiter DEX** and **Jito liquid staking** suffered decreases of **25%** and **41%**, respectively, further compounding the challenges faced by Solana.

Dwindling Onchain Volumes Drive Investor Concerns

As a direct consequence of the plummeting TVL, Solana’s onchain transaction volumes have also dramatically declined. The weekly transaction volume fell sharply from **$97 billion in mid-January** to just **$11 billion this week**, indicating a worrying trend. These metrics underscore a stark decline in network activity, with an average downward shift of **20-40%** in investor participation over the last month. Investors are evidently reevaluating their positions in the Solana ecosystem, which heightens the urgency to understand the underlying issues affecting TVL.

Memecoin Market Capitalization Takes a Drastic Hit

Solana’s recent challenges extend beyond traditional metrics as the **memecoin market cap** on the blockchain plummeted significantly alongside the decrease in TVL. Currently, the market cap for Solana-based memecoins has fallen from a peak of **$25 billion in December 2024** to approximately **$8.3 billion**, indicating a **68% drop** in less than three months.

Many memecoins associated with the Solana ecosystem are witnessing severe drops in value, with losses typically ranging from **80% to 90%** from their all-time highs. This downtrend is further echoed in the decline in trading activity across the DEX landscape on Solana, which collapsed from **$22.1 billion on January 19** to a mere **$1.6 billion** by February 26. This stark decline in memecoin activity signifies not only reduced liquidity but also a shallow demand within the ecosystem.

Impact of Decreased Memecoin Trading on SOL Prices

The drastic reduction in memecoin trading volume has dire implications for SOL, as it suggests waning engagement from both retail and institutional investors. A lack of activity on the network can create a **vicious cycle**, leading to further price declines and eroding confidence among existing and potential investors alike. Continued diminishment of user activity and liquidity threatens to put **downward pressure** on SOL’s price, compelling traders to closely watch the market dynamics.

Technical Analysis: SOL Price Faces Potential Further Declines

From a technical standpoint, Solana’s price has formed a **double-top** pattern, a bearish signal suggesting that further declines may be on the horizon. Currently, SOL’s trading is hovering around a critical support level of **$135**. Should this position fail to hold, the next liquidity levels of concern would be between **$120 and $110**—representing a potential **22% decline** from current price ranges.

The relative strength index (RSI) at **28** indicates oversold conditions, implying that the **$135 support level** could be a favorable entry point for investors. A significant buying response at this level, complemented by increased trading volumes, may pave the way for a short-term recovery.

Market Analyst Insights on SOL’s Future Trajectory

Renowned market analyst Gum suggests that the lowest SOL price may stabilize around **$110**, reflecting a level of previous interest from substantial funds like **Galaxy** before any potential bounce. Investors should proceed with cautious optimism as they monitor Solana’s broader performance moving forward.

Conclusion

The current landscape for Solana is dire, with substantial losses in both total value locked and memecoin capitalization signaling waning investor confidence. While the potential for recovery exists, notably around established support levels, the **short-term outlook remains cautious**. Investors should maintain vigilance as the network’s performance continues to evolve in the face of declining metrics and market sentiment.

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