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Solana’s price has plummeted 10% to $162 due to a decline in network activity, association with high-profile rug-pull scams, upcoming token unlocking, and underperformance against Bitcoin and Ethereum.
As the cryptocurrency market continues to fluctuate rapidly, one of the biggest losers is Solana. Its price has dropped by 10% to $162 as traders and investors lose faith in the project. But what’s behind this precipitous decline? We’ve uncovered four key reasons why Solana’s price is falling today.
Firstly, it’s undeniable that a series of high-profile rug-pull scams have tarnished Solana’s reputation. Reports have surfaced linking a Solana wallet to multiple fraudulent projects, including Libra (LIBRA) and Melania (MELANIA), both with ties to political figures. These schemes, which generated massive profits before vanishing, have left investors reeling. Consequently, trust in the network has dwindled.
Secondly, on-chain activity on Solana has taken a nosedive. The number of users on the Solana network has plummeted from 18.5 million in November to just 8.4 million – a staggering 55% decline. Additionally, the total amount of money transacted on Solana has dropped dramatically, falling from $2 billion to a paltry $26 million. With fewer people using it, Solana’s value is naturally suffering.
Thirdly, a forthcoming token unlocking event poses significant risks for Solana’s price. A massive 15 million SOL tokens, worth over $7 billion, are set to be unlocked between February and April. This supply increase could create additional selling pressure, further weakening the currency.
Lastly, Solana is struggling against its major counterparts. Since early February, the SOL/ETH trading pair has plummeted by 28%, indicating that Ethereum is gaining strength at Solana’s expense. Furthermore, data from LookOnChain reveals that a whopping $772 million worth of stablecoins have exited the ecosystem in just one week – an ominous sign for investors.
Until Solana’s network activity picks up and investor confidence is restored, it appears that SOL may continue to face downward pressure.
Source: coinpedia.org
