Solana Faces 30% Monthly Drop as $2B Token Unlock Looms Amid Declining DEX Volume

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Solana’s decentralized exchange (DEX) trading volume has hit its lowest point since mid-December, dropping to $2.61 billion on February 16.

This decline coincides with a broader downturn in the Solana ecosystem, with weekly DEX volume falling to $20.2 billion, marking a fifth consecutive week of decline. Leading DEX platforms Raydium and Orca experienced significant volume reductions of 45% and 30% respectively, though Meteora managed to buck the trend with an 18% increase.

Major Token Unlock Event Sparks Market Concern

In addition to market pressures, Solana SOL/USD has a major token unlocking event on March 1 with 11.2 million SOL tokens (value around $2.06 billion) ready to be unleashed. Mostly including tokens bought during FTX bankruptcy auctions at $64 by companies including Galaxy, Pantera, and Figure, this unlock represents 2.31% of the entire supply and market capital value.

Memecoin Scandals Impact Solana Ecosystem Confidence

Solana’s memecoin industry has lately generated fresh controversies that have further lowered market mood. Particularly erasing ecosystem confidence is the LIBRA token event, which caused a $4.3 billion market cap wipeout in less than 24 hours. Along with other memecoin-related problems, this one has helped SOL drop 40% from its January peak.

Solana’s Institutional Activity Shows Mixed Signals

Institutional interest is clear even with the pessimistic short-term view. Approvals for Solana-based ETFs are being sought by many companies including Canary Capital, VanEck, 21Shares, and Bitwise. Kelly Greer, managing director of Galaxy, has also tried to alleviate worries about the forthcoming unlock by referring to Solana’s strong daily spot volume of $3.6 billion as perhaps enough to absorb selling pressure.

SOL/USD Technical Analysis Points to Bearish Sentiment

The market has shown increasingly bearish positioning, with the ratio of long to short positions in futures markets declining from 4:1 to 2.5:1. Binance’s perpetual futures platform reports an even more dramatic shift, with short positions now outweighing longs by 4:1. The technical outlook appears challenging, with SOL having:

• Dropped below the crucial $180 support level
• Fallen 30% over the past month
• Approached a potential bearish flip of the 200-day EMA for the first time since October 2024

What’s Next for Solana Price?

Looking ahead, several experts still find Solana’s long-term future bright. Cited as favorable drivers to help reverse the present downturn are the Firedancer improvement and prospective SOL ETF releases in 2025-2026 with possible staking integration. Still, traders wait for the effect of the March 1 token unlocking event, hence immediate market mood stays cautious.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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