Solana's Price Plummets 10% Amid Scams, Declining Activity, and Upcoming Token Unlocking

Solana's price has plummeted by 10% to $162, marking a significant decline in the cryptocurrency's value. This sharp drop is attributed to several key factors, including a decrease in network activity, association with high-profile rug-pull scams, upcoming token unlocking, and underperformance against Bitcoin and Ethereum.

One of the primary reasons behind Solana's poor performance is its association with high-profile rug-pull scams. Reports have surfaced linking a Solana wallet to multiple fraudulent projects, such as Libra (LIBRA) and Melania (MELANIA), which have ties to political figures. These projects generated massive profits through manipulative tactics before disappearing, leaving investors at a loss. Consequently, people are losing trust in Solana, contributing to its declining price.

Another concerning factor is the sharp decline 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. Additionally, total money moved on Solana has dropped from $2 billion to $26 million. With fewer people using the network, Solana's price is struggling to maintain its value.

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 to the market.

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 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.