Solana's price drops 45% amid memecoin popularity
Solana (CRYPTO:SOL) has dropped over 45% in value since the launch of the Official Trump (CRYPTO:TRUMP) memecoin.
According to TradingView data, Solana’s price fell from over $261 on January 18 to $143 by March 21.
The increasing popularity of memecoins appears to be affecting Solana’s price performance.
Dan Hughes, founder of the decentralised finance platform Radix (CRYPTO:XRD), suggested that memecoins may be draining liquidity from Solana.
He told that memecoins tend to recirculate existing capital within the ecosystem rather than attracting new external investment.
Hughes noted that much of the liquidity flowing into the memecoin market, including TRUMP, comes from investors selling other crypto assets.
This has led some to call memecoins "liquidity vampires."
Despite Circle minting over $8.75 billion worth of USDC (CRYPTO:USDC) since January 1, Solana’s price has dropped more than 24%, suggesting that new liquidity is primarily going into memecoins rather than Solana itself.
Solana’s price briefly recovered above $140 despite a $2 billion token unlock on March 1, which released over 11.2 million SOL tokens into circulation.
Industry analysts had warned of a potential downside move for SOL, as many of the unlocked tokens were purchased at $64 per SOL in FTX (CRYPTO:FTT) auctions by firms like Galaxy Digital, Pantera Capital, and Figure.
Analysts predict that Solana could reach a high of $357.32 in 2025, with an average price of $298.67 and a low of $240.02.
Memecoins are now dominating Solana’s decentralised exchange (DEX) volumes.
On February 27, memecoins accounted for 70% of Solana’s DEX volumes.
The total trading volume on Solana DEXs reached $1.2 billion, with memecoins contributing $840 million to this figure.
At the time of reporting, the Solana (SOL) price was $168.56.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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