Solana (SOL) Suffers Investor Outflows, Sees User Exodus as Rug Pulls and Insider Schemes Dent Confidence

Rug pulls and insider schemes involving Solana-based memecoins are driving investor outflows and a decline in capital inflows, as confidence in the sector deteriorates.

Rug pulls and insider schemes involving Solana (SOL)-based memecoins are driving investor outflows and a decline in capital inflows, as confidence in the sector deteriorates.

The rate of monthly capital inflow into Solana and Solana’s MEME index turned to a monthly negative of -5.9%, according to a Glassnode chart shared with Cointelegraph.

This decline marks a significant drop from December 2024’s peak, largely due to reduced memecoin investment, according to CryptoVizArt, a senior analyst at Glassnode.

“Solana capital outflows hit 7 months low as memecoin mania fizzles out,” the analyst told Cointelegraph, adding:

“The rate of monthly capital inflow into Solana SOLUSD and Solana’s MEME index turned to a monthly negative of -5.9%, as per this Glassnode chart. This decline marks a significant drop from December 2024’s peak, largely due to reduced memecoin investment.”

Solana’s price fell over 29% during the past month, while Ether’s (ETH) price fell over 15% and Bitcoin (BTC) fell 7%, according to Cointelegraph Markets Pro data.

Solana user activity is also in decline. The number of active addresses on the network fell to a weekly average of 9.5 million in February, down nearly 40% from the 15.6 million active addresses in November 2024.

“Solana user activity fell to 9.5M weekly average in February, down nearly 40% from 15.6M in November 2024. This coincides with a decline in investor activity as a result of disappointment in recent Solana memecoin launches,” the Glassnode analyst stated, adding:

“This decline in user activity may also be linked to the recent capital outflows from the Solana ecosystem.”

Disappointment in recent Solana-based memecoin launches, particularly the Libra token, which was endorsed by Argentine President Javier Milei, has also led to a decline in investor activity. Insiders of the project allegedly siphoned over $107 million in liquidity in a rug pull, triggering a 94% price collapse within hours and wiping out $4 billion in investor capital.

As capital outflows continue, millions of dollars worth of crypto are being transferred from Solana to other blockchains, signaling a potential capital exodus that may turn into a net positive for the blockchain’s long-term growth.

Over $7.7 million was transferred from Solana to Arbitrum and over $6.9 million to Ethereum, according to Debridge data.

“Solana had a bad year in 2023, but not because the blockchain is inherently bad. Advanced tech attracts bad actors and cases of insider corruption,” blockchain researcher Aylo wrote in a Feb. 18 Medium post.

“The problems with L1 gambling tokens are not inherent to the technology itself. Solana had a hard time in 2023, but it’s because the vast majority of activity on the chain was gambling. If the SOL price and other L1 token prices are solely held up by gambling activity then the space will stay quite small and the larger valuations won’t be justified.”