- Solana’s ecosystem is facing falling network activity and is expecting a major token unlock ahead
- SOL’s price is likely to fall below the $180 support zone
Solana [SOL] has faced difficulties over the last few weeks, and the recent bearishness across the market has affected the token. In fact, the altcoin’s price fell from $256 to $173 in just under a month. That’s a 32% drop, and more could be ahead for one of the market’s foremost cryptocurrencies.
Source: Messari
FTX’s bankruptcy estate is scheduled to unlock 11.2 million SOL on 1 March, worth $1.4 billion, as part of FTX’s asset liquidation plan. After the exchange’s collapse in November 2022, it sold 41 million SOL to institutional investors such as Galaxy Digital, Pantera Capital, and Figure Markets.
These unlocks could lead to heightened volatility and a potential price drop.
Solana’s ecosystem controversy drives down demand and network activity
The launch and subsequent rug pull of the controversial LIBRA memecoin, which Argentine President Javier Milei promoted for a brief period on social media, has grown into a huge scandal. The Argentine flagship index S&P Merval fell 5% on Monday, 17 February, after the President’s memecoin tweet, which has since been deleted.
The memecoin was not the first launch on the Solana chain, but it saw the CEO of Meteora, Ben Chow, step down from his role at the helm of the DeFi platform.
With all the news swirling around Solana, it is no wonder that the network activity took a hit. The number of active addresses is now well below its January lows, reaching levels from October 2024. Now, while this level is still high compared to most of the previous year, the hype and the number of trades in the ecosystem has noticeably fallen.
The total transaction fees also fell to its late December lows.
This also hinted at lowered trading activity. However, Solana remains a strong long-term performer. Its daily revenues are nearly tenfold that of Ethereum [ETH], although its total value locked (TVL) is lagging significantly behind.
Source: SOL/USDT on TradingView
Finally, the price action revealed a bearish structure. The $180-level has been ceded to the bears, and the price was under the $175 Fibonacci retracement level. The bearish price action showed that a bounce towards $180-$190 was possible.
Regardless of whether such a bounce occurs, it is likely to fall towards $157 and lower in the coming days, given its bearish momentum.
