TLDR
- Solana hit a yearly low of $118 as meme coin trading on Pump.Fun shows signs of fatigue
- A “perfect storm” of factors including FTX token unlocks and Trump’s trade war impacted price
- A Solana whale accumulated 195,000 SOL ($23.2 million) from exchanges during the dip
- Staking activity increased with Cumberland DRW staking 48,182 SOL worth $5.72 million
- Analysts remain bullish despite current pressure, with some targeting a recovery to $150
Solana’s price fell to its lowest point in over a year this week, hitting $118 as several factors combined to create downward pressure on the second-largest smart contract network.
The decline comes as Pump.Fun, a platform for launching meme coins on Solana, shows clear signs of cooling activity. Daily fees on the platform have dropped 99% from January highs of $15.5 million to just $117,000 on Sunday.
This decline in meme coin interest follows controversy surrounding a Solana-based coin called LIBRA, which was endorsed by Argentina’s President Javier Milei last month. Daily active addresses on Pump.Fun have halved from 290,000 to around 146,000.
According to Matthew Nay, a research analyst at Messari, Solana’s price has been affected by a “perfect storm” of negative news. This includes the meme coin controversy and fears about newly unlocked tokens.
One major factor was the recent unlock of 11.16 million Solana tokens (worth about $1.3 billion) from FTX’s bankruptcy estate. This development freed up a large amount of Solana, creating negative sentiment.
The broader market has also been under pressure from President Donald Trump’s trade war policies. Bitcoin briefly fell below $80,000, touching $76,000 on Tuesday, with many altcoins following this downward trend.
Whales are buying the dip
Despite these challenges, whale activity suggests some large investors see the dip as a buying opportunity. According to data from Lookonchain, a Solana whale withdrew 195,000 SOL from major exchanges including Bybit, OKX, and Gateio in the past 24 hours.
This accumulation, worth approximately $23.2 million, indicates strong confidence in Solana’s future potential from at least one major investor. The purchase came as SOL traded around the $120 mark.
Staking activity has also increased, with Cumberland DRW staking 48,182 SOL worth $5.72 million. This combined with the whale accumulation suggests reducing token supply available on exchanges.
Potential recovery with this increased buying activity
As of the latest data, SOL was trading at around $123, having bottomed at $113.19 and peaked at $131.24 within the past 24 hours. Market watchers anticipate potential recovery amid this increased buying activity.
Some traders remain highly optimistic about Solana’s prospects. Trader “Coinvo” pointed to historical patterns suggesting Solana may “explode” ahead as it follows trends similar to 2021.
Another analyst known as “Lucky” suggested that even a small market movement could push SOL above $150. According to this analyst, Solana currently has a strong demand zone between $110-$127.
Looking ahead, many market participants are watching developments around potential Solana ETFs. Experts believe Solana has strong chances for ETF approval, though Nay suggests this may be on the SEC’s back-burner compared to other priorities.
Solana ETF coming soon
Based on current insights, Nay predicted the SEC will approve a spot Solana ETF in the second half of this year. While interest in Solana may cool in the short term, he believes the network will capture significant activity when the market rebounds.
Meme coins have been one of Solana’s biggest growth drivers over the past year. Pump.Fun has generated nearly $585 million in total revenue since launching in January 2023, though prediction markets suggest this figure may not exceed $615 million by month’s end.
In summary, while Solana faces short-term pressure from multiple factors, whale buying, increased staking, and analyst optimism point to potential recovery. The price action reflects broader market challenges but also shows signs of resilient investor interest in the platform.
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