Why Is Solana (SOL) Price Down 6% Today?

Solana price is undergoing an intense drawdown at the moment. Among the many reasons is the stablecoin outlook.

Onchain data analytics platform Lookonchain has revealed worrying statistics on Solana’s stablecoins. While Solana is losing its stablecoins, its major rival, Ethereum (ETH), is gaining them.

This situation about the stablecoins launched on these blockchains could offer investors insights about future prices.

Solana Losing Stablecoins, Ethereum Gaining Them

The data from Lookonchain showed an opposing growth in Tether’s USDT stablecoin and Circle’s USDC on Solana and Ethereum.

Notably, the USDT and USDC stablecoins on Solana decreased by $772 Million in the last seven days. On the other hand, USDT and USDC stablecoins launched on Ethereum rose $1.1 Billion within the same time frame.

Insights from this data show that while Solana is losing the USDT and USDC stablecoins, Ethereum is amassing them. The drop in the Solana stablecoins has contributed to the declining prices of SOL.

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The USDT and USDC stablecoins have gained relevance in cross-border payments, remittances, and on-chain settlements. These digital assets are becoming more important to the rising user base.

Thus, their declining transactions in Solana suggest the blockchain’s reducing dominance in the Decentralized Finance (DeFi) space.

This has dampened investor interest in Solana, resulting in the ongoing price decline.

In January, Solana’s stablecoin growth surpassed other major blockchains, making it the top stablecoin network in the market. At the time, Solana’s price skyrocketed beyond the $200 mark.

The altcoin price has since dropped below this level and is now trading at $178.9. In the last 24 hours, SOL’s price is down 6.5%. In contrast, ETH is up 1.5% within the same time frame to $2,721.

The Solana FTX Dump FUD

Another major factor contributing to the declining Solana prices is the Fear, Uncertainty, and Doubt (FUD) surrounding FTX’s planned SOL dump.

According to Wu Blockchain, 11.2 million, valued at $2.06 Billion, is scheduled to be unlocked by the FTX bankruptcy auction on March 1.

This unlock represents almost the entire FTX’s estate stash of 61,853 SOL remaining in its reserve after March 1.

Following its collapse in 2022, the defunct FTX exchange liquidated its holdings in Solana through three auctions.

The top three buyers, including OTC traders Galaxy, Pantera, and Figure, purchased the coins from $64 to $95 and $102.

These players acquired large quantities of SOL to diversify their portfolios or leverage the growth potential of the Solana network.

That said, the incoming token unlock event has riled the market, with SOL’s chart today showing over 6% decline in value.

With the token unlock only a few days away, investors are worried about a potential increase in Solana liquidity.

LIBRA Token and Memecoin Collapse: How It Impacts Solana Price

The recent saga surrounding Solana’s memecoin LIBRA also appears to have contributed to the decline in Solana’s price.

Last week, Argentina’s President Javier Milei promoted LIBRA on his X account. Eventually, the memecoin became one of the most damaging rug pulls in recent history, wiping out $4.4 Billion in investor funds.

According to crypto firm lmk, at least 24 addresses lost over $1 Million, while 61 suffered losses exceeding $500,000.

One user who purchased $5.6 Million to buy 2.1 million LIBRA tokens ended up selling for $430,000, losing $5.1 Million.

The collapse of LIBRA from its all-time high has further exacerbated the ongoing liquidity crunch in Solana.