Solana (SOL) has plunged more than 50% from its all-time high of $295 in January, marking one of its worst monthly performances since the FTX collapse in November 2022. A key driver behind the drop appears to be a slowdown in meme coin trading, which had previously fueled significant on-chain activity.
Meme Coin Trading Cools Off
Solana’s meme coin ecosystem, particularly the Pump.fun trading platform, has seen a sharp decline in activity. Since its launch, Pump.fun has minted over 8.1 million tokens, generating $577 million in fees. However, after hitting a peak daily trading volume of $218 million on February 12, activity has dramatically slowed.
Data from Dune Analytics shows that trading volume on Pump.fun fell 94% in just one day—from $89.5 million on February 25 to $5.03 million on February 26. Most tokens on the platform have dropped 80–90% from their peak values, reflecting a broader decline in the meme coin market.
DeFi Ecosystem and Capital Outflows
The downturn in meme coin activity has impacted Solana’s decentralized finance (DeFi) ecosystem, leading to substantial outflows. According to DefiLlama, Solana’s total value locked (TVL) has plummeted from $12 billion in mid-January to $7.13 billion, wiping out nearly $5 billion in under a month.
Raydium, the decentralized exchange that facilitates trading for Pump.fun-graduated meme coins, has suffered a 50% drop in TVL over the past 30 days. Capital is also flowing out of Solana’s network, with over $500 million bridging to Ethereum, Arbitrum, and Sonic in the last month.
Solana’s Price Struggles
Currently trading at $142, SOL has fallen 15% in the last seven days. Bulls are struggling to establish a strong support level, with $140 acting as a critical threshold. If SOL fails to hold above this level, the next key support lies between $125 and $130. A breakdown below this range could push Solana to its lowest price since August 2024.
For SOL to regain its bullish momentum, it needs to reclaim the $150 mark and see a resurgence in TVL and on-chain volumes. Until then, the risk of further declines remains high, adding to market uncertainty.
Upcoming Token Unlock and Institutional Outlook
Adding to the pressure, an 11.2 million SOL token unlock is scheduled for March 1, which could introduce additional selling pressure on the market. Meanwhile, the likelihood of a Solana ETF approval remains low in the short term, reducing the chances of institutional investment providing immediate support. With meme coin trading cooling off and DeFi activity declining, Solana faces a challenging road ahead. Whether the network can recover from this setback will depend on its ability to regain investor confidence and attract renewed capital inflows
