A 40% plunge in January. Solana, the "king of retail investors"?

Author: Gyro Finance

If you want to talk about the most eye-catching public chain in this bull market, Solana, who is nicknamed "computer room chain", is definitely the only one. The heavy blow brought by FTX has become the soil for Solana to be reborn. With its outstanding performance and precise positioning, SOL has created a rare growth miracle with the east wind of MEME, rising from US$8 and up to more than US$290, which has left the market dumbfounded. . Active participants, active funds, and active projects constitute an active ecosystem, which also makes slogans that surpass Ethereum frequently appear in the occasions talking about Solana.

But recently, the performance of the "King of Retail Investment" has not been very satisfactory. In the past month, the price of SOL has dropped from the highest price of US$295.83 to the current price of US$169, with the largest drop of more than 45%, almost halfway. The sluggish price, the gradual coldness of MEME, and the unlocked tokens are in sharp contrast with the storm of the SOL venue at the conference.

It makes people wonder, is Solana OK or not?

Judging from the price alone, the performance of SoL's sluggish performance is mainly due to two direct incentives: one is MEME and the other is token unlocking. Previously, SOL had successfully entered the chain casino with MEME, but success and failure were both Xiao He. The recent MEME circle has really disappointed the market.

The root cause is the popular celebrity coins. The Trump currency, Trump's wife currency, and the Argentine president are closely related to LIBRA. Celebrities use their influence to harvest and harvest, which has already lacked liquidity, feel powerless. In terms of price performance, Trump's currency has fallen 76% from its highest point, with 800,000 people standing guard at the top of the mountain, MELANIA falling by 90%, and LIBRA, with a slightly weak influence, has been exaggerated to a 92% drop, almost returning to zero, nearly 30% The big players took over at a high level, and more than 70,000 addresses were harvested.

The threshold for issuing tokens is too low, and the presidents chose their own MEME between Bitcoin and Ethereum, which undoubtedly shattered the market's confidence in liquidity injection. This emotion cannot be expressed to the project party, but it is directly feedback to the infrastructure. Especially considering the controversy between Jupiter and Meteora at LIBRA, Solana also suffered an unrestrained disaster.

Of course, Solana is not entirely innocent. Since it became a MEME casino, major institutions, robots, and market makers have made billions of dollars in profits through MEME on soalna. According to statistics from DeFiLlama founder 0xngmi, the total profit is between US$3.6-6.6 billion, of which MEV (maximum extractable value) is US$1.5-2 billion, trading robots and applications are US$1.09 billion, automatic market makers 0- Between US$2 billion, Trump-related insiders ranged from US$500 million to US$1 billion, and the Pump.fun platform also made a fortune, earning US$492 million.

MEME on Solana has become a money cow for high-frequency traders, arbitrageists and insiders. As the market is declining, many people have directly chosen a simpler confrontation method - quit. According to crypto analyst Ali, the number of active addresses on the Solana chain has dropped significantly from 18.5 million in November 2023 to 8.4 million at present, a drop of 54.6%. According to Nansen, the number of active addresses on February 18 was only 5.17 million, a 30-day drop of 22.37%.

With fewer people, the price of the coin will naturally be affected, not to mention that even Bitcoin is now in a half-dead Schrödinger state. However, it is not enough to hit the MEME market alone to fall by 40% in a month and become the worst performing token among the top 30 currencies in market capitalization.

Token unlocking has become another mountain that lies across the SOL. Back in the last month, anonymous crypto commentator artchick.eth shared Solana's 2025 token unlocking schedule on social media, mentioning that Solana's existing token inflation rate is 4.715%, but in the next three Over 15 million SOL tokens worth more than US$7 billion will enter circulation supply within the month (February-April). On March 1, the maximum unlocking will come, and 11.2 million SOL tokens worth about 2.06 billion US dollars will be unlocked.

SOL Unlock Timetable, Source: artchick.eth

To trace the source of this unlock, you still have to go back to FTX. As part of the bankruptcy proceedings, FTX has liquidated 41 million SOLs in three auctions, with the largest buyer being Galaxy Digital, which acquired 25.52 million SOLs at $64 per token, accounting for 62.24 of the total %, Pantera, whose buyer consortium bought 13.67 million SOLs at $95 per token, with a return rate of 93%. Other buyers purchased 1.8 million SOLs for USD 102 per token.

What was unlocked on March 1 is also part of the liquidation SOL. The only thing to be happy is that FTX has started repaying the funds on February 18, and Kraken has completed the first fund allocation of FTX estate, paying compensation to more than 46,000 creditors. The creditors were happy, but the SOL holders were quite frightened.

In the current not-so-good market, large-scale unlocked SOLs will inevitably be regarded as selling pressure, which will hit investor confidence. Cryptocurrency trader RunnerXBT bluntly stated that it is a "dangerous" period for buying Solana. It also stressed that once the SOL unlock occurs, companies such as Galaxy, Pantera and Figure will withdraw $3 billion, $1 billion and $150 million in unrealized income.

The external environment is turbulent and the internal environment is unstable. The market takes quick action. In addition to selling it for stable assets, short selling has become the only option. Not only does the total open position contract diverge and the capital interest rate, but the long-short ratio also differs greatly. With the increase in position volume and the capital interest rate becoming negative, the current short-short ratio is 4:1, while most positions fall in SOL The increase after $190 is represented by the rising bearish sentiment of newly added buyers. Trading data has even contracted significantly, with Solana's on-chain activity falling sharply to $3.1 billion on February 17 after reaching a peak of $35.5 billion on January 17.

Against this background, SOL has lived up to expectations and fell from $290 on January 19 to hit a low of $160, down 45% in January. It is not an exaggeration to describe it as falling water. Is Solana, the king of retail investors, going to die?

What is quite interesting is that at the consensus conference held a few days ago, the Side Event held at Solana's home stadium was still crowded and lively. Some people say they have attention. If they pay attention in the currency circle, it means capital flow. In sharp contrast, the activities of inscriptions and NFTs are the once popular concepts. Now there are only a few participants.

In this regard, most industry insiders still seem to show considerable interest in Solana. Ultimately, the Solana ecosystem is still relatively capable. Looking at its ecosystem, there are many celebrity projects in the fields of payment, DeFi, LSD, Meme, gaming, NFT, and DePIN. In terms of total TVL, SolanaTVL reached US$8.24 billion. Although the gap is huge compared to Ethereum's US$57.3 billion, it has also successfully jumped from the No-Check in 2023 to the second place in the public chain, accounting for the total TVL 7.72%. It is worth mentioning that in the past two weeks, due to unlocking, Solana TVL fell 19% in the past two weeks, and Jito, Kamino, Marinade Finance and Sanctum are flowing out quickly.

A stand-alone chain can return to its peak from below $10. In addition to the so-called technological and positioning advantages, the power of capital is the truly invisible hand. Strong Western capital such as A16z, Multicoin, Galaxy, Pantera constitutes the confidence of a strong man, which makes Solana feel at ease in many payment fields. In previous institutions' 2025 forecasts, all expressed high confidence in SOL without exception.

Returning to fundamentals, except for the increasingly downward MEME that is difficult to repair, the impact of token unlocking is still relatively controllable in the short term. This unlocking has started in early February, and the market has long expected it, while the upcoming unlocking only accounts for 2.31% of the total supply and market value. Compared with the spot trading volume of around US$3.6 billion in 24 hours, the selling pressure is not It's quite strong. Of course, if the capital party chooses to sell large amounts in the market at one time, SOL will not encounter a heavy blow, but for personal gain, the capital party will not choose this method and will mostly control the frequency of sales, even if A one-time sell-off will also choose the form of off-market OTC to minimize the impact on the market as much as possible, thereby maximizing personal interests. Of course, it may not be completely optimistic. In addition to the unlocking on March 1, there will be more selling pressure in the future starting this year.

Judging from the positive news, there will be a wave of hype in SOL ETF. As of now, five institutions have submitted SOL's spot ETFs, namely Grayscale, Bitwise, VanEck, 21Shares and Canary Capital. Although the SOL ETF failed last year, the SOL ETF has ushered in a dawn with the new regulator coming to power. The SEC has accepted the 19b-4 application of Grayscale Solana ETF, with the latest approval date on March 30. , but according to general procedures, the SEC will usually continue to postpone the application acceptance, with a time period of up to 240 days. Given that the nature of SOL's securities has been clearly named, the subsequent approval needs to be watched. In terms of possibility alone, the probability of Litecoin and Dogecoin being approved is relatively greater, but in any case, as long as the ETF is still under approval. , the narrative will not stop.

On the other hand, this does not mean that there is no problem with Solana. Judging from the current structure, although DeFi and DePin are also popular, Solana does rely heavily on the MEME ecosystem. According to Messari's fourth quarter 2024 data released, Solana's application revenue jumped from $268 million in the third quarter to $840 million in the fourth quarter, an increase of up to 213%, and this increase was mainly attributed to MEME. Among them, Pump.fun generated revenues of US$235 million in the fourth quarter, and DeFi trading terminal Photon and decentralized exchange Raydium recorded revenues of US$140 million and US$74 million respectively.

Objectively speaking, although MEME has become an important narrative sector for crypto and has long-term effects, in the final analysis, MEME's carnival still originates from the industry's continued sluggish economic cycle. In other words, MEME is more like a lottery effect in the crypto market. With the behavior of making a big fortune, the MEME cycle is actually a phased product under the background of insufficient liquidity. However, the market is tired of VC-style profit-making, but despite seemingly fair launch, MEME rush, insider trading, and dealer harvesting are also everywhere. This high-frequency, stream-like harvesting is severely damaged to a certain extent The industry ecology. Taking LIBRA as an example, the team behind it even tried to establish connections with the Nigerian president, which means that perhaps the presidential tokens can run all over the streets in the future, and the scarcity is even more undeniable.

Against this background, Solana's MEME dependence is too high, and it will inevitably rise and fall with MEME. The market's anger after the LIBRA exploded, the doubts about Jupiter and Meteora, and the blow to SOL also confirm this point. As the market speculation has been suppressed, the associated SOL will inevitably lose its lips and teeth. In addition, the most critical expectation of unlocking and selling is nothing more than that SOL is continuing to decline.

Admittedly, at this stage alone, Solana is still one of the most active public chains in the market. Emotional catharsis is difficult to last for too long. Solana, supported by capital, is still "doing things" Bulid, but is full of FUD. The time left for SOL in the crypto market may not be as long as it imagined.