Solana (SOL) Drops 17% to ~$164 Amid $2.5B Unlock & LIBRA Memecoin Fallout

Traders are closely monitoring the SOL/ETH ratio as it reverses from record highs of 0.08 to roughly 0.06, reflecting a sharp change in market sentiment amid a series of high-profile memecoin scandals. The decline in SOL’s price—down about 17% to near $164—is compounded by a significant drop in on-chain activity and the looming release of over 15 million SOL tokens valued at more than $2.5 billion.

• The SOL/ETH ratio has shifted from a record 0.08 to around 0.06, signaling a change in market sentiment.

• Scandals like the LIBRA debacle, which erased $4.4 billion in market cap, have undermined confidence in Solana’s ecosystem.

• SOL’s price has dropped approximately 17% to trade near $164, reflecting both external controversies and internal technical pressures.

• A 19% decline in decentralized finance (DeFi) TVL and a significant contraction in DEX trading volumes point to waning network engagement.

• The upcoming unlock of over 15 million SOL tokens—worth more than $2.5 billion—adds further bearish pressure, contributing to investor caution.

Recent market activity has drawn sharp attention to Solana (SOL) as traders note a marked reversal in the SOL/ETH ratio, now trending from a record high of 0.08 down to approximately 0.06. Once hailed as the “best retail onboarding chain,” Solana’s narrative is now clouded by controversy and skepticism. The catalyst appears to be a series of memecoin scandals—most notably the LIBRA incident—that have shaken investor confidence and precipitated a broader sell-off.

SOL/ETH price chart | Source: TradingView

Data from TradingView reveals that after peaking at over 0.08 SOL per 1 ETH in January, the ratio began reversing course by mid-February. By February 18, it had dipped to nearly 0.06, a sign that market sentiment is shifting away from Solana. This change is underscored by SOL’s price drop from around $168 to approximately $164—a 17% decline within a matter of days. According to market observers, such movements serve as a barometer for broader shifts in investor confidence. As noted by Andy of Rollup Ventures on X, the sentiment around Solana has deteriorated due to what he described as “scammy behavior and insider trading.”

The LIBRA memecoin scandal has been particularly damaging. Launched with high expectations and even receiving an endorsement from Argentine President Javier Milei, LIBRA quickly imploded—losing over $4.4 billion in market capitalization within hours as early investors offloaded their positions. Similar controversies have hit other Solana-based memecoins, such as Harry Bolz and Vigilante, whose meteoric price surges were quickly followed by dramatic crashes. Such events have not only dented the token’s image but also spurred wider concerns about the integrity of projects built on the Solana network.

Solana TVL sees decline in February | Source: DefiLlama

The recent turbulence has been mirrored by a sharp decline in on-chain activity. Once driving record-high decentralized exchange (DEX) volumes—peaking at $35.5 billion on January 17—Solana’s network witnessed a dramatic contraction, with daily DEX volumes plummeting by over 90% in some periods. Similarly, the total value locked (TVL) in Solana’s DeFi applications has fallen by 19% over two weeks, driven by net outflows from key platforms like Jito, Kamino, and Marinade Finance. This drop in activity further underscores the bearish trend as investors shy away from an ecosystem increasingly marred by controversies and technical challenges.

Adding to the bearish sentiment is the impending unlock of over 15 million SOL tokens—worth more than $2.5 billion—that is expected in the first quarter of 2025. This massive influx into the circulating supply is likely to create additional selling pressure, further depressing prices. Technical indicators compound these worries: with the Relative Strength Index (RSI) flirting with oversold levels and support hovering around $170 to $160, any further downward movement could trigger a broader slide. Open interest on derivatives platforms has also seen a modest decline, suggesting a lower level of trader participation amid the current uncertainty.

Ethereum’s TVL remains strong | Source: DefiLlama

While Solana grapples with these challenges, Ethereum appears to be on a more stable footing. Following its Dencun upgrade—which cut transaction fees by roughly 95%—Ethereum has staged a near 30% rebound in February, supported by robust development in areas like real-world assets and agentic AI. Layer-2 data has also shown impressive growth, with fee revenues and activity on the mainnet increasing significantly. This contrast has led some analysts to argue that, despite short-term turbulence, Ethereum may be better positioned for mainstream adoption, thus further tilting market sentiment away from Solana.

Despite the current bearish signals, not all market voices are pessimistic about Solana’s long-term prospects. Asset managers such as VanEck have projected that SOL could reach as high as $520 by the end of 2025, driven by its potential to capture a greater share of the smart contract market and improve DEX volume performance. Moreover, in a bid to restore confidence and widen investment options, Coinbase has recently introduced CFTC-regulated futures contracts for Solana. This move not only broadens the range of trading instruments available for SOL but also signals a growing acceptance of regulated crypto products in the U.S. market.

Ultimately, the short-term outlook for Solana is being heavily influenced by both internal challenges—like declining on-chain activity and significant token unlocks—and external factors, including high-profile memecoin scandals. As traders weigh these factors, the coming weeks will be critical in determining whether SOL can rebound or if the bearish trends will continue to dominate market sentiment.