Despite the price of Solana showing resilience following the biggest token unlock, it continues to struggle under pressure from the growing memocoin market.
Solana (Sol) has dropped by over 45% since official Trump (Trump) memo coins have fallen from over $261 on January 18th to over $143 on March 2nd.
According to Dan Hughes, founder of decentralized finance platform Radix, the potential for increased investors’ appetite for Memecoins could be limiting Solana’s price performance.
SOL/USDT, one-day chart. Source: Cointelegraph/TradingView
Memecoins “There is no tendency to draw in many external capital flows. Instead, existing ecosystem capital “round robin” is from one meme to the next,” Hughes told Cointelegraph, adding:
“Even with Trump, the majority of inbound liquidity was leaks from other crypto assets. People are selling crypto portfolios to buy Trump at extreme FOMOs (fears they missed).”
“In the market, you can see the effects in a market where everything except Trump and Solana are red and labeled as liquid vampires,” he added.
Sol/USDT, 3 month chart. Source: CointeLegraph/TradingView
MemeCoins may be attracting a significant portion of the new incoming liquidity from Solana. According to Lookonchain, the circle has minted $8.75 billion worth of coins (USDC) since January 1, but Solana’s prices have exceeded 24% despite new liquidity.
Related: WinterMute pulls $38 million sol out of binance before unlocking the $20 billion solna lock
Still, Solana prices were able to recover above $140 despite experiencing a $2 billion token unlock that released over 11.2 million Sol Tokens into circulation on March 1, with Solana’s biggest token unlock.
Industry watchers were concerned about the key negative side of SOL as a massive amount of unlocked tokens were purchased for $64 per SOL at FTX auctions by companies such as Galaxy Digital, Pantera Capital and Figure.
Related: Binance has not “dumped” Solana or other token holders – spokesman
Macro Event, Lagpur, limits institutional crypto investments
External macroeconomic factors and recent security incidents continue to limit the benefits of the crypto market, Hughes said.
“Events on the world stage have a greater impact than previous cycles. A much larger proportion of capital invested is institutional, more cautious and requires consideration of broader markets, factors and variables when making decisions (…).”
“Continuous rug pulls, hacks, loss fatigue and couples. It takes time for the rest of the dust to settle down and it takes time for Mojo to come back,” he said.
Investor sentiment is still recovering from the $1.4 billion buy-bit hack that occurred on February 21, marking the biggest hack in cryptography history.
https://www.youtube.com/watch?v=q980_6djfyu
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