Sharp Drop in Network Activity and Transfer Volume

Solana price has seen a sharp decline in network activity, with transfer volume dropping from $1.99 billion on November 19, 2024

Solana price has seen a sharp decline in network activity, with transfer volume dropping from $1.99 billion on November 19, 2024, to $14.57 million on February 23, 2025. This decline coincides with a fall in SOL’s price from $238.02 to $168.07 over the same period. The decrease in transaction flow may be troubling as it raises concerns about network engagement and investor confidence.

Solana’s transfer volume peaked in mid-November before entering a period of decline. The drop has been steady, with a few temporary rebounds. Since the end of December, traffic in the network has decreased, and it therefore can be assumed that there are fewer on-chain transactions.

The current value is $14.57 million that has clearly deviated from the peak of $1.37 billion reached in November and is less transaction throughput on the network. This move indicates that the users and investors may be inactive by not investing in new opportunities and reducing their trading activity.

Solana is trading lower from its peak price due to several factors. The main reason is that the Total Value Locked (TVL) of the Solana ecosystem has been decreasing. It started at $10 billion in January of 2023 and is now at 8.8billion.

The other factor that can cause this is the shift of liquidity to other blockchains. More than $500 million has shifted so far to Ethereum, Arbitrum, and other chains in the last 1 month. This suggests that some investors are migrating to an alternative platform, perhaps to take advantage of superior incentives, or the platform thought Solana had shortcomings which would hinder its performance.

Also, the fluctuations in the market led to the changes in Solana-based meme coin prices. As per the data of the month, December 2024, Solana-related meme coins had a market capitalization of $ 25 billion, which has now declined to $ 8.3 billion. The tokens have dipped in value from 80% to 90% as less people are investing in the Solana ecosystem due to lack of hype.

Another downside is that the company has a value to be unlocked on 1st of March 2025 amounting 11.2 million SOL tokens, which is equivalent to over 2 billion dollars. This amounts to an inflation of 10% annually, and there are 16.1 million tokens to be issued between February and May 2025.

Some were purchased at cheaper rates during the FTX related sales and hence they may opt to sell at high rates provided they purchased at $64 per SOL. This trader has already moved $38mln worth of SOLs to Binance where it is possible that he is waiting for further positions.

There is high volatility in sentiment due to the unknown approval time of the Solana ETF in the United States. Interested firms that have applied for such funds include Franklin Templeton, Grayscale Investments and Bitwise amongst other firms. Nevertheless, there are still rather high levels of regulatory risk, which has cast doubts about the time horizon for approval.

There is an indication that Solana is in a downward trend currently as depicted by very important supports at $140 and $130. The RSI fell to 26.10 thus implying the SOL is oversold in the current trend.

Meanwhile, Cumulative Volume Delta (CVD) is currently negative at -31.31K, showing that selling volume surpasses buying activity. This confirms the ongoing downtrend and continued selling pressure on Solana.

This implies that a short-term rally to retest $150 – $155 may be experienced if the buyers come in. But if the selling pressure persists, it will likely break below $138 support with the next potential low $130.

In this article, the views and opinions stated by the author or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.

Olivia Stephanie is a FinTech enthusiast with a keen understanding of financial markets. Her passion for economics and finance has led her to explore emerging blockchain technology and cryptocurrency markets.