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Solana (SOL) has hit a bearish run in the past week, shaving off about 5% and billions of dollars in market value since yesterday.
The coin traded for $170 as of June 6, having gained immensely in the previous 12 months. But the Solana price slumped as low as $123.42 on Monday.
SOL has declined by at least 11% in the past week, coinciding with the general slump in the value of crypto assets amid negative investor sentiment across the cryptocurrency market.
Mert Mumtaz, the co-founder and CEO of infrastructure startup Helius Labs, hinted that the headwind might continue this week, and claimed to have offloaded all his crypto holdings because “crypto is over."
I sold everything I had. Every coin I owned is gone. I'm completely out of the cryptocurrency market, I can't take it anymore. Aggressive dumping, manipulation, everything is so intense. crypto is over, I am out, I am very glad to meet you, life has dreams, each is wonderful. pic.twitter.com/8NQIWVmQBb
— mert | helius | hSOL (@0xMert_) June 24, 2024
Broader market slump
Solana’s steep decline can be attributed to a combination of market-wide factors and specific challenges the cryptocurrency faces. In addition, Solana—typically known for its high throughput and low transaction fees—has been facing network outages and competition from other blockchain platforms.
While Solana has shown in the past that it could rebound, recent meme coin trading has pulled it in both directions, said Andrew Kang, a co-founder of Mechanism Capital, a crypto-focused investment firm.
I believe the timeline for this is delayed by 1-2 quarters. Some market views
Experts now suggesting that solicitation approval/ETFs added to wealth management platforms is slated for Q4 instead of late May as originally suggested
With a lack of acute ETF inflows, momentum… https://t.co/L7Pb9RizlL
— Andrew Kang (@Rewkang) June 19, 2024
A growing number of celebrities have recently lent their branding names to new meme coins flooding the market. At least 500,000 meme coins were launched in May alone.
Kang predicted that Solana might plummet to $80 “if meme trading takes a pause for the next few months.”
For Solana, the beginning of the end of meme coin mania might have come after right-wing internet personality Andrew Tate threatened to “CRASH THE SOLANA NETWORK.”
Tate claimed to have burned over $38 million worth of Solana-based meme coin TOP G, effectively removing 58% of its supply and causing its price to surge by over 130%. Despite the substantial burn, which left TOP G’s market cap at over $65 million, Tate claimed he personally profited nothing from the action.
But the recent SOL decline is not occurring in isolation.
Other cryptocurrencies like Ethereum (ETH), Cardano’s ADA, and BNB Chain’s BNB also registered similar losses, with Bitcoin dipping to $61,000. Meanwhile, meme coins Dogecoin (DOGE) and Shiba Inu (SHIB) saw close to a 5% drop.
Furthermore, the broader financial markets have also been under pressure, with major indices like the S&P 500 seeing declines.
Meme coin activity has notably caused trading volume on Solana to spike. According to data from DeFi Llama, Solana's trading volume surged recently, largely driven by the explosive interest in meme coins like TOP G, Tate's DADDY and Australian rapper Iggy Azalea's MOTHER.
Still, negative exchange-traded fund (ETF) inflow and poor macro data from preceding weeks contributed to the plunge, Kang said.
Legal risks for celebrities promoting meme coins
The surge in meme coin activity has also raised legal concerns, particularly for celebrities promoting these tokens.
While meme coins can bring significant attention and financial gains, they also come with major legal pitfalls. Celebrities may face substantial civil and criminal liabilities if their actions are perceived as market manipulation or if they make false or misleading claims about the tokens they endorse.
Edited by Stacy Elliott.