Solana’s Struggles: A Deep Dive into Its Price Decline
Why Is Solana Falling Despite Billions in Liquidity?
It’s been a rough start to 2025 for Solana (SOL). Despite receiving a whopping $10 billion in new liquidity and being included in the US government’s Digital Asset Stockpile, SOL prices have tumbled nearly 29%, according to TradingView data.
That might seem surprising, considering it was one of the only three altcoins handpicked for inclusion—in the company of Cardano (ADA) and XRP (XRP). With such tailwinds, you’d think SOL would be soaring. Instead, it’s spiraling downward.
So, what’s going on? Let’s break it down.
SOL/USD, year-to-date chart. Source: Cointelegraph/TradingView
Liquidity Is Pouring In, But Not Into SOL
Since the beginning of 2025, over $9.5 billion in USDC stablecoins has been minted on Solana, as reported by Lookonchain. In theory, this should have provided a solid boost for SOL.
However, analysts suspect that instead of fueling SOL’s rally, much of this fresh liquidity has found its way into memecoins rather than benefiting SOL holders.
Source: Lookonchain
This could explain why SOL has been steadily losing ground, currently down nearly 49% since the launch of Trump’s Official Trump (TRUMP) token in January.
Memecoins Steal the Spotlight
If you’ve been around crypto long enough, you know how FOMO (fear of missing out) drives market moves. As soon as the Trump token launched, many investors flocked to it, selling off other assets—including SOL—to jump on the bandwagon.
Dan Hughes, founder of Radix, explained,
“Most of the inbound liquidity was outflow from other crypto assets, people selling their crypto portfolio to buy TRUMP in extreme FOMO.”
So, instead of pumping SOL’s price, investors are chasing trends elsewhere.
SOL/USD, 1-day chart. Source: Cointelegraph/TradingView
Investors Are Fleeing to Safer Assets
To make matters worse, a recent wave of memecoin scams has sparked fear in the market, leaving investors looking for safer places to park their capital.
This shift has hit Solana hard, with $485 million withdrawn from Solana’s ecosystem in February alone. According to Binance Research, much of that money moved to Ethereum, Arbitrum, and the BNB Chain—networks perceived as safer alternatives.
Solana outflows. Source: deBridge, Binance Research
A broader market trend is also at play: Bitcoin dominance is rising as investors look for stability. Binance Research reported,
“Overall, there is a broader flight towards safety in crypto markets, with Bitcoin dominance increasing 1% in the past month to 59.6%.”
Even memecoins on BNB Chain have been faring better, driven in part by CZ’s viral tweets about his dog, Broccoli—yes, really.
The Libra Token Scandal Devastated Confidence
A rug pull involving the Libra token, which was endorsed by Argentina’s President Javier Milei, further damaged trust among investors. Allegations flew that insiders siphoned off over $107 million, wiping out 94% of Libra’s value in hours.
The result? Investors lost a staggering $4 billion, reinforcing skepticism about Solana-based projects and weighing further on SOL’s price.
What’s Next for Solana?
While Solana continues to innovate, the current storm of market-wide sell-offs, memecoin mania, and security concerns has made it difficult for SOL to gain traction.
For long-term believers, this could be a buying opportunity—but in the short term, Solana still has some hurdles to clear.
One thing’s for sure: Crypto markets never stay quiet for long. Buckle up! 🚀
Related: Binance denies dumping SOL and other token holdings
