Solana Drops 22% to Five-Month Low Amid Memecoin Market Decline
The cryptocurrency market is facing volatility, particularly affecting Solana (SOL), which has dropped 22%, reaching a five-month low. This decline follows a broader market downturn, with Bitcoin decreasing by 12% over the past week.
Key Factors Influencing Solana's Decline
- Recent scandals involving celebrity-backed memecoins, notably the LIBRA incident.
- The peak of memecoin launches on Solana exceeded 71,000 in one day but has decreased to 26,000.
- A 44% decline in open interest for Solana futures, indicating reduced investor confidence.
- A 54% decrease in trading volume over the last 48 hours, now at $5 billion of Solana's $66 billion market cap.
Analyst Insights
Zach Pandl from Grayscale noted the current phase of memecoin trading on Solana has ended. While many memecoins lack intrinsic value, they contributed positively by onboarding users and generating revenue.
Currently trading around $134, this level is seen as critical support. Analysts warn that if this support fails, the price could drop below $100, representing a potential decline of over 65% from Solana’s all-time highs.
