Solana (SOL) has faced a significant downturn, with its price plummeting 50% from its all-time high of $295 on Jan. 19 to $141.37. February’s 42% drawdown marks the largest monthly decline since November 2022, when the FTX exchange collapse sent shockwaves through the market.
Solana’s TVL Drops $5 Billion in a Month
Solana’s total value locked (TVL) hit a record $12 billion in January but has since dropped to $7.13 billion. This sharp decline highlights a waning investor confidence in the network’s DeFi ecosystem. Data from DefiLlama shows that Raydium, a major decentralized exchange, witnessed a staggering 60% drop in TVL, while Jupiter DEX, Jito liquid staking, and Kamino Lending saw losses of 25%, 46%, and 33% respectively.
This slump has also impacted Solana’s on-chain volume, which plummeted from $97 billion per week in mid-January to just $7 billion currently. The diminishing activity suggests traders are actively pulling liquidity from the Solana ecosystem.
$500 Million Moved to Ethereum and Arbitrum
With SOL’s price declining and network activity slowing, traders have shifted nearly $500 million in liquidity to competing blockchains such as Ethereum, Sonic, and Arbitrum over the past month. This migration underscores a growing skepticism surrounding Solana’s sustainability amid ongoing market turbulence.
Crypto analyst Miles Deutscher pointed out that Solana’s fee burn had dropped to a record low of $177,000 in a month. He noted that many traders have lost faith in the network, stating, “People are tired of getting burned at the casino, and many are walking away from the tables.”
Solana’s fee burn dropped to just $177K yesterday – the lowest day in months.
— Miles Deutscher (@milesdeutscher) February 18, 2025
People are tired of getting burned at the casino, and many are walking away from the tables.
But human nature never changes. Now it's not a matter of IF they will be back, but WHEN they will be back. pic.twitter.com/ajSXT4JBZJ
Memecoin Market Collapse Worsens SOL’s Decline
Solana’s recent downturn is also linked to the collapse of the memecoin market. At its peak in December 2024, Solana’s collective memecoin market cap stood at $25 billion. However, it has since plunged to $8.3 billion, with a 23% drop in just 24 hours. Pump.fun, a key memecoin launch platform, generated $550 million in revenue but saw most of its tokens lose 80% to 90% of their value.
Also Read: Solana Price Plummets Below $140 – Is a Crash to $100 Inevitable?
While SOL itself is not a memecoin, the network’s reliance on speculative assets has impacted its valuation. As Solana grapples with these challenges, market sentiment continues to sour, raising concerns about its near-term stability.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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