Solana [SOL] Has Faced Significant Market Volatility

Solana [SOL] has faced significant market volatility over the past month. Selling pressure, declining network activity, and FTX-related liquidations have driven this trend.

Solana [SOL] has faced a month of market volatility, driven by selling pressure, declining network activity, and FTX-related liquidations.

This trend has seen the cryptocurrency’s price drop from February highs of $224 to lows of $140, with concerns growing over a $2 billion token unlock and major whale transactions.

On the 1st of March token unlock saw 11.2 million SOL enter circulation, valued at between $1.57 billion and $2.03 billion. Unlike standard vesting releases, these tokens originated from the FTX bankruptcy estate, raising fears of immediate liquidation to satisfy creditor claims.

This event, combined with large transfers to exchanges, has fueled bearish sentiment in recent weeks.

Solana, once a top-performing asset in early 2025, has struggled to maintain momentum. Since November 2024, its transfer volume has plummeted by 99%, dropping from $1.99 billion to just $14.57 million. Concerns over ecosystem engagement have grown.

Panic selling or strategic move?

Solana’s price has seen a more than 30% drop since mid-February, breaking key support levels that were previously signaling bullish trends.

On the 27th of February, SOL broke below the $168 support level. The next day, it dropped further to $144 following a 2.243 million SOL ($324.62 million) transfer to Coinbase, fueling speculation of large-scale sell-offs.

However, Arthur Cheong, founder of DeFiance Capital, confirmed on social media that his firm’s substantial SOL holdings, acquired via an over-the-counter (OTC) deal with Galaxy Digital at a price of $64, were unlocked on the 1st of March.

“Participated in the SOL OTC deal at $64 via Galaxy and received the bullet unlock today. Not selling a single one of them. I think it will be substantially higher in 3 months.”

Despite this, analysts warn that continued sell-offs from FTX’s estate or institutional investors could push SOL below $125-$130, levels identified by technical analysts as the next potential support zone.

FTX Liquidations: a $2 billion overhang or a market opportunity?

A significant portion of Solana’s price action can be attributed to the FTX bankruptcy liquidation process, which has seen millions of SOL being sold to institutional buyers at heavily discounted rates.

Galaxy Digital, led by Mike Novogratz, was the largest buyer, acquiring 25.5 million SOL at an average price of $64 per token.

At current prices near $143, these investors have seen significant gains, but the potential for further selling remains a concern.

FTX’s bankruptcy proceedings are among the most expensive in U.S. history, with legal fees exceeding $1 billion. Liquidators are under pressure to recover funds for creditors, which could lead to additional SOL sales in the coming months.

Solana’s on-chain collapse

Beyond price action, Solana’s on-chain activity has seen a dramatic decline. As per Glassnode, transfer volume in February fell to just $14.57 million, a 99% drop from November 2024 levels of $1.99 billion.

This trend signals a lack of engagement within the Solana ecosystem, raising concerns over the sustainability of its DeFi and dApp sectors.

According to DeFi Llama, Total Value Locked (TVL) within Solana’s DeFi ecosystem has also declined, dipping below $9 billion for the first time since November 2024.

According to crypto analytics firm Token Terminal, around $508 million in liquidity has moved to other blockchain ecosystems in February alone, indicating a weakness in Solana’s relative dominance.

Bear market trap or buy-the-dip opportunity?

Solana is now facing a critical inflection point. The market is watching to see if Solana can stabilize. Investors are considering the impact of FTX’s liquidation strategy, upcoming unlocks, and broader crypto market sentiment.

While some investors, including major institutional buyers, are holding their positions in anticipation of a potential rebound, the 99% decline in transfer volume and capital outflows from Solana’s ecosystem highlight the ongoing challenges.

The next few weeks will be critical in determining whether Solana can stabilize or face further downside pressure. As the dust settles on FTX’s bankruptcy and token unlocks, the true market demand for SOL will come into play.