Solana has been among the worst-performing cryptocurrencies in the past 24 hours, plunging 10% to $162. The decline continues as the network experiences lower activity and increasing bearish sentiment. Here are the four key reasons behind Solana’s sharp price drop today.
Solana’s Link In High-Profile Rug-Pull Scams
One major reason behind Solana’s poor performance is its mention in high-profile rug-pull scams. Reports have surfaced linking a Solana wallet to multiple fraudulent projects, including Libra (LIBRA) and Melania (MELANIA), both of which have ties to political figures.
These projects generated massive profits through manipulative tactics before disappearing, leaving investors at a loss. Because of this, people are losing trust in Solana.
Sharp Decline in Network Activity
Another concerning factor is the fall in Solana’s on-chain activity. The number of users on the Solana network has dropped from 18.5 million in November to 8.4 million, a 55% fall.
Also, total money moved on Solana has dropped from $2 billion to $26 million. With fewer people using it, Solana’s price is struggling.
Upcoming Token Unlocking
Investors are also bracing for a large supply increase in the coming months. Over 15 million SOL tokens, worth over $7 billion, are set to be unlocked between February and April.
This increase in circulating supply could create more selling pressure, further weakening Solana’s price. Market analysts have advised caution, as the unlocking event could bring additional volatility.
Solana’s Struggle Against Bitcoin and Ethereum
Solana is also showing weakness against major cryptocurrencies like Bitcoin and Ethereum. Since early February, the SOL/ETH trading pair has dropped by 28%, indicating that Ethereum is gaining strength over Solana.
Furthermore, data from LookOnChain shows that $772 million worth of stablecoins have exited Solana’s ecosystem in just a week, signaling reduced trust among investors.
Until confidence in the network is restored and trading volumes pick up, SOL may continue to face downward pressure.
