Solana’s price has plummeted to $131.89, hovering precariously close to its lowest level since October, as investors brace for a massive token unlock that threatens to flood the market with $1.3 billion worth of cryptocurrency. The upcoming release of 11.2 million SOL tokens from the FTX bankruptcy estate on March 1 has triggered a 27% price collapse over the past week alone.
The steep sell-off accelerated yesterday with another 6.5% drop as traders positioned themselves ahead of the unlock event. FTX, once a major backer of the Solana ecosystem before its spectacular collapse in 2022, has been systematically liquidating crypto assets to repay creditors. This looming supply injection comes at a particularly vulnerable moment for Solana, which has already shed more than 50% of its value since reaching an all-time high of $295 in January.
The FTX bankruptcy estate has already sold 41 million SOL tokens to institutional buyers including Galaxy Digital, Pantera Capital, and Figure. These controlled sales have absorbed significant supply without crashing the market. However, the upcoming March 1 unlock represents the largest single release yet, raising questions about whether similar institutional demand exists to cushion the impact.
“The timing couldn’t be worse for Solana,” noted a crypto market analyst familiar with the liquidation process. “We’re seeing a perfect storm of selling pressure from the FTX estate combined with a broader retreat from risk assets across the crypto sector.”
Technical indicators paint a troubling picture for SOL holders. The cryptocurrency broke below the crucial support level of $127 earlier this week before recovering slightly to its current $130.89 position. The relative strength index sits at 23.92, indicating severely oversold conditions, though this metric alone hasn’t proven reliable for timing reversals in volatile crypto markets.
Ecosystem Activity Collapses as Memecoin Frenzy Fades
Solana’s decline extends beyond price action into fundamental network metrics. The blockchain’s total value locked (TVL) in decentralized finance applications has cratered from $12 billion in mid-January to $6.8 billion as of February 28, according to DeFiLlama data. This 43% drop signals a rapid exodus of capital from the ecosystem.
Much of this decline coincides with waning interest in memecoins, which previously drove massive transaction volumes on Solana. Pump.fun, the network’s primary memecoin trading platform, has witnessed a 94% collapse in daily trading volume from $89.5 million on February 25 to just $5.03 million the following day. The platform had previously generated $577 million in fees from the trading of over 8.1 million minted tokens.
“Solana’s recent success was heavily tied to memecoin activity,” explained a blockchain researcher tracking on-chain metrics. “As that speculative frenzy cools, we’re seeing a reset in both network usage and token price.”
The sharp decline has extended to futures markets as well. According to Coinglass data, open interest in Solana futures contracts has halved from $7.4 billion in mid-January to $3.7 billion, indicating mass liquidations of leveraged positions and a significant reduction in speculative interest.
Institutional Developments Offer Distant Hope
Despite the immediate selling pressure, some institutional developments might provide longer-term support. Asset management giants VanEck and Franklin Templeton have filed applications for Solana exchange-traded funds (ETFs), potentially opening the door to significant mainstream investment.
However, these regulatory approvals remain speculative and could take months or even years based on the SEC’s historical timeline for cryptocurrency ETF applications. The recent approval of Bitcoin ETFs took over a decade of applications before finally receiving regulatory greenlight.
For short-term traders, key technical levels are in sharp focus. If Solana fails to maintain support at $130, analysts project potential drops to the $110-$100 range before finding meaningful buyer interest. Conversely, reclaiming the $150-$166 range would signal a potential trend reversal.
