Solana's User Activity and Investor Confidence Plummet Amidst Memecoin Scandals

Generated by AI AgentCoin World
Friday, Feb 21, 2025 9:07 am ET1min read
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Solana, a leading blockchain platform, has witnessed a decline in user activity and investor confidence due to a series of rug pulls involving Solana-based memecoins. These incidents have led to a decrease in capital inflows and outflows, as investors become increasingly cautious about the sector.

The rate of monthly capital inflow into Solana (SOL) and its MEME index has turned negative, with a monthly decline of -5.9%, according to data from Glassnode. This marks a significant drop from the peak in December 2024, largely attributed to reduced investment in memecoins. CryptoVizArt, a senior analyst at Glassnode, noted that the negative capital flow in the MEME sector has contributed to the decline in Solana's capital inflows, although Solana still maintains some positive momentum.

Solana's price has fallen by over 29% in the past month, while Ether's (ETH) price has dropped by over 15% and Bitcoin (BTC) has fallen by 7%. The decline in Solana's price is accompanied by a decrease in user activity on the network. The number of active addresses on the network fell to a weekly average of 9.5 million in February, down nearly 40% from the 15.6 million active addresses in November 2024.

The decline in investor activity has been linked to disappointment in recent Solana-based memecoin launches, particularly the Libra token. The project's insiders allegedly siphoned over $107 million worth of liquidity in a rug pull, triggering a 94% price collapse within hours and wiping out $4 billion in investor capital.

As confidence in Solana weakens, millions of dollars worth of crypto is being transferred from Solana to other blockchains, signaling a potential capital exodus. Over $7.7 million worth of funds were transferred from Solana to Arbitrum, and over $6.9 million to Ethereum, according to Debridge data.

Despite the recent setbacks, some experts believe that the removal of bad actors and the raising of standards may ultimately benefit Solana's long-term growth. Blockchain researcher Aylo noted in a Feb. 18 X post that the washout of bad actors would lead to a more robust and sustainable ecosystem for the platform.