- SOL has seen a massive decline in trading volume as interest in memecoins wanes.
- Social sentiment has dropped, and Solana’s token distribution could exert further downward pressure on the asset.
Solana [SOL] has remained in the bearish zone, recording losses week over week. In the past four weeks, it has lost a cumulative 38.35%, with the downward trend continuing, leading to an 8.87% decline.
At press time, SOL was trading at $167.37.
AMBCrypto’s analysis suggested that the market could see further price declines as sentiment increasingly aligned with bearish conditions.
Volume decline as memecoins extract value
SOL’s trading volume has seen a sharp decline across centralized and decentralized exchanges (DEXs), confirming the shift in sentiment.
At the time of writing, reports showed that SOL’s total transfer volume, after peaking at $2 billion in November, has plunged to $26 million.
When such a sharp decline occurs, it suggests reduced interaction with the ecosystem as more funds are extracted.
Source: Glassnode
AMBCrypto links this decline to the fading interest in memecoins.
The recent LIBRA token, supposedly linked to Argentine President Javier Milei, triggered significant selling pressure on SOL.
After its launch, LIBRA reached an all-time high of $4.563 before plummeting to $0.336, a 96.63% drop. To contextualize, trading volume fell from $963.6 million at its peak to just $3.60 million.
A similar trend was observed with major memecoin listings, including TRUMP and MELANIA.
When trading volume declines significantly, it often forces an asset’s price to drop sharply, as market participants sell to secure profits, break even, or cut their losses.
2 factors add to bearish pressure
According to Luna Crush, Solana’s social engagement is on track to reach its lowest point of the year.
At the time of analysis, it had declined by 69%, indicating reduced activity and interaction among online communities, which contributes to further price pressure as meme hype fades.
Source: LunarCrush
The upcoming FTX SOL unlock, set to begin on the 1st of March, is likely to add to the price decline. Reports indicate that 11.2 million SOL will enter market circulation.
Typically, an increase in supply, when matched with low demand, leads to further price drops. The current declining trading volume suggests weak demand for SOL.
With the unlock approaching, the asset could face additional losses unless sentiment shifts.
