Solana (SOL) Prices Drop 40% in a Month, Analyst Calls it a “Perfect Storm”

SOL, the native digital asset of the high-performance blockchain platform Solana, fell to almost $160.00 on Tuesday, February 18.

Solana's (CRYPTO: SOL) price has taken a beating in the last month, dropping more than 40% as multiple converging factors have created what one analyst described as a “perfect storm.”

Here's a closer look at some of the key factors that have contributed to SOL's recent decline:

Meme coin mania cooling: According to Aran Hawker, CEO of CoinPanel, the meme coin mania that once drove interest in Solana has cooled, leading to declining investor interest in the cryptocurrency.

On-chain activity decreasing: Hawker also pointed to a sharp decrease in on-chain activity, with active addresses and transaction volumes on the Solana network declining significantly.

Recent activity on the X (Twitter) account of blockchain analyst Ali (@Ali_charts) showed a Glassnode chart indicating that the number of active addresses on Solana dropped from over 18.5 million in late October to less than 8.4 million on February 15.

Recent developments involving LIBRA coin, a project that quickly accumulated a market capitalization of $4.5 billion but then lost 90% of its value, have also had an impact, according to some analysts.

In a post on X, which was later deleted, Argentina President Javier Milei endorsed the digital asset, which is linked to a project called Libra that is said to help generate funding for small and medium-sized enterprises in Argentina, CoinDesk reported.

These events have eroded investor confidence in Solana-based projects, according to DiPasquale.

Another major development that analysts have cited as putting bearish pressure on SOL prices is the March 1 token unlock, which will increase the token's total supply by 11.16 million.

“The March 1 token unlock for SOL will increase the token's total supply from 384.8 million to 496.3 million, an increase of 11.16 million tokens,” Hawker said.

“We have seen an influx of institutions swapping out SOL for ETH with this pressure looming. We can see this in the derivatives markets as the Deribit open interest shifted from 75% sol in January to 35% sol now.”

One market observer sees bitcoin's price action and the LIBRA situation differently, highlighting how they have impacted other digital currencies.

“Since January 2025 Bitcoin topped off at about $109,000 which we know was primarily fueled by the first pro crypto administration in American history that acted as fundamental analysis and the demand of Bitcoin ETFs, according to Bitwise inflows in 1/25 hit ~$5 Billion,” said the TikTok influencer who goes by Wendy O.

“This caused a lot of資金 to rotate out of altcoins and into bitcoin, causing many altcoins to top out.”

This chart shows bitcoin's recent price action:

This chart highlights bitcoin's recent price action.

“Solana also topped off at ~294 January 2025 which aligns with Bitcoin price action,” Wendy O said via emailed comments.

“Unfortunately, with the Argentina Memecoin LIBRA debacle that exposed some bad actors and builders on the Solana blockchain, the whole entire industry has been impacted. The USA still does not have set guidelines on crypto despite President Trump’s executive order and this incident has been compared to the fall of FTX sentiment wise.”

I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.