Solana Prices Drop Over 34% This Year as Market Reevaluates Layer-1 Blockchain Value

Both Solana and Ethereum have experienced intense selling pressure this year, with prices down over 34% as of the latest reports. This trend is being attributed to a growing perception among investors that Layer-1 blockchains, once seen as the backbone of the crypto economy, are increasingly being viewed as open-source software rather than proprietary infrastructure according to market analysis. This reevaluation has mirrored a broader market decline affecting software stocks and has led to a reassessment of the long-term investment thesis for these blockchains.

The shift in perception has impacted market dynamics and positioning. Previously, investors focused on the network effects and infrastructure role of these blockchains, but now, they are seen as more speculative bets on the future of software development according to market analysis. This has made them more vulnerable to market sentiment and risk-averse investor behavior, especially in the context of macroeconomic uncertainty and interest rate volatility according to financial analysis.

Institutional and retail investors are now more cautious. A major bank has advised buying into 'quality' cryptocurrencies like Solana during the dip, suggesting the current price environment offers a long-term investment opportunity. However, with leveraged short positions on both Solana and Ethereum reaching $70 million in total exposure, the bearish sentiment remains strong according to market data. Additionally, the broader cryptocurrency market is marked by fear-driven behavior, with the Crypto Fear and Greed Index at historically low levels according to market reports.

What Is Happening With Solana and Ethereum This Year

The year has started with intense volatility for Solana and Ethereum. Both have lost over 34% of their value as of early February 2026. This decline is not an isolated event but part of a broader market correction affecting the crypto space. The drop has coincided with a decline in Bitcoin prices and increased liquidations across the sector according to market analysis.

The sell-off has been amplified by a change in investor sentiment. What was once considered foundational to the crypto economy is now being treated more like speculative software bets according to market analysis. This shift has affected how these networks are valued and has led to increased scrutiny of their long-term sustainability and scalability according to reports.

Why Are Layer-1 Blockchains Being Compared to Open-Source Software

Investors are increasingly comparing Layer-1 blockchains to open-source software, which is currently undervalued in the market. This analogy suggests that the value of these blockchains is tied to their development ecosystems and adoption rates, rather than their role as infrastructure. For Ethereum, this is supported by the transition to a proof-of-stake (PoS) model and the development of Layer 2 (L2) rollups according to market analysis. For Solana, it is attributed to its high-speed, low-cost transaction model and its appeal to developers according to industry reports.

This new valuation framework has led to a reassessment of the investment thesis for these blockchains. Previously, they were seen as essential components of the crypto economy. Now, they are being evaluated more like open-source projects with uncertain long-term viability. This has led to increased scrutiny and a more cautious approach from both institutional and retail investors according to market data.

What Are the Implications for Investors

For investors, the implications of this revaluation are significant. The current environment presents both risks and opportunities. On the one hand, the bearish sentiment and increased volatility have made it more difficult to time the market according to market analysis. On the other hand, some analysts suggest that the current price levels represent a long-term investment opportunity, particularly for 'quality' cryptocurrencies like Solana according to market reports.

The market is also characterized by increased positioning in derivatives and leveraged products. Large traders have opened significant short positions on Solana and Ethereum, signaling a strong bearish conviction according to market data. This increased activity has the potential to amplify price swings and increase liquidation risks according to trading analysis.

Despite the challenges, some analysts remain optimistic about the long-term prospects of these blockchains. Ethereum, in particular, is expected to benefit from upcoming upgrades that could significantly enhance its scalability and efficiency according to market analysis. These developments could drive increased network activity and adoption, potentially leading to a price recovery over the next decade according to forecasts.

Investors are advised to remain cautious and to consider both the risks and opportunities presented by the current market environment. The shift in perception and valuation has made these blockchains more vulnerable to macroeconomic conditions and market sentiment according to market analysis. However, for those who believe in the long-term potential of these technologies, the current price levels may represent an attractive entry point according to investment advice.