Solana (SOL) Drops 5% Amid Reduced Network Activity and LIBRA Memecoin Fallout

Solana (SOL) has faced a 5% price decline, bringing its value to $171.73, amid falling network activity and the LIBRA memecoin controversy. While the broader crypto market is experiencing corrections, Solana’s recent troubles appear to be ecosystem-specific.

What’s driving this downturn, and can Solana recover?

1. Solana’s Network Activity Is Declining

Falling Active Users & Transactions

• Active addresses have dropped from 18.5 million to 8.4 million, a staggering 55% decline since November 2024.
• Transaction volumes on Solana have plummeted from $2 billion to just $26 million, a 99% reduction—indicating lower user engagement.
• DeFi and NFT activity on Solana has slowed down, affecting overall liquidity on the network.

Liquidity & Developer Sentiment

• Some liquidity providers have withdrawn funds, fearing increased volatility.
• Developers have also expressed concerns about Solana’s increasing association with low-quality memecoins and speculative projects.

These signs point to a major slowdown in Solana’s growth, which is affecting investor sentiment.

2. LIBRA Memecoin Collapse: A Blow to Solana’s Reputation

The LIBRA memecoin, built on the Solana blockchain, became one of the fastest-growing tokens, reaching a $4.5 billion market cap—before crashing by 94% in a suspected rug pull.

How the LIBRA Crash Hurt Solana

• Investor Confidence Shaken: Many traders lost millions in the LIBRA collapse, leading to concerns about Solana’s role in hosting scam projects.
• Memecoin Reputation Damage: Solana had been thriving on the memecoin boom, but the LIBRA fallout has exposed the risks of an unregulated token market.
• Whale Sell-Offs: Large holders dumped SOL after LIBRA crashed, adding downward pressure to SOL’s price.

Community Reactions

• Some traders are moving funds to Ethereum and BNB Chain, fearing more rug pulls on Solana.
• Discussions on X (formerly Twitter) suggest memecoins have overrun Solana, leading to an unsustainable ecosystem.

The LIBRA debacle may force Solana to introduce stricter measures for projects launching on its blockchain to rebuild trust.

3. Upcoming Token Unlock Could Add More Selling Pressure

Solana is set to unlock 11.16 million SOL tokens in March 2025, increasing the circulating supply.

What This Means for SOL’s Price

• More supply could lead to selling pressure, driving prices down further.
• If investor confidence does not recover, SOL could drop below $160 before stabilizing.

4. Market-Wide Trends Impacting Solana

While Solana’s issues are ecosystem-driven, the broader crypto market has also slowed down:

Bitcoin has struggled to hold above $95,000, leading to weaker altcoin performance.
Ethereum is trading sideways, keeping DeFi and NFT activity stagnant.
Regulatory uncertainty in the U.S. has caused institutional investors to be more cautious.

With Bitcoin’s dominance still high, Solana and other altcoins will need strong catalysts to regain momentum.

5. What’s Next for Solana?

Potential Recovery Scenarios

• If Solana regains user trust, network activity could rebound and push SOL back toward $200+.
• Partnerships and ecosystem expansion could help offset the impact of the LIBRA collapse.

Bearish Risks

• More scams or failed projects on Solana could worsen its reputation.
• If Bitcoin’s price remains weak, SOL could continue to trend downward.

Solana needs to rebuild investor confidence by improving security, transparency, and ecosystem quality.

6. Conclusion: Can Solana Bounce Back?

Solana’s 5% price drop highlights ongoing concerns about network sustainability and the impact of speculative trading.

With declining user activity, the LIBRA fiasco, and a looming token unlock, SOL faces a critical period.

What do you think?
Will Solana recover and reclaim $200?
Or is this the start of a longer downtrend?

Let us know your thoughts below!