Solana, a popular cryptocurrency, experienced a nearly 6% gain on Friday, following the upward trend of Bitcoin as it surpassed the $80,000 mark once again. Despite this positive movement, the total value of assets locked in the Solana chain has decreased by $5.26 billion from its peak, representing a significant drop of almost 50%. This decline in Total Value Locked (TVL) indicates a shift in market dynamics that is impacting Solana negatively.
One of the main drivers behind the decrease in TVL for Solana is the struggle of meme coins based on the chain to recover, leading to a sense of fear among traders. TVL is a crucial metric in the decentralized finance (DeFi) space, used to gauge investor confidence, a chain’s relevance, and demand among crypto traders. Current data from DeFiLlama shows that Solana is gradually losing relevance in the ongoing crypto market cycle, with TVL dropping from $12.191 billion to $6.939 billion.
The crash of meme coins on the SOL chain has played a significant role in this decline, with the top 10 protocols on the Solana blockchain experiencing up to a 40% drop in TVL in the past month. Factors such as Bitcoin’s flash crash, controversies surrounding meme coins like MELANIA (MELANIA) and LIBRA, as well as the price decline of Official Trump (TRUMP) token, have contributed to capital outflows from these protocols.
In addition, the market dynamics of Solana-based meme coins have also shifted, with some showing signs of recovery while others continue to struggle. The market cap of all tokens in the Solana meme token category has increased to $8.949 billion, with some tokens experiencing negative returns while others are beginning to recover. This shift indicates a change in trader attention and capital allocation within the crypto space.
On the positive side, the recent announcement of Solana futures by the CME Group and MetaMask’s plan to add native Solana support in May 2025 have sparked optimism for Solana’s future. The correlation between Solana and Bitcoin remains strong, with Bitcoin’s price movements influencing the price trend of Solana. With positive on-chain metrics and technical indicators supporting a bullish thesis for Solana, the token may see a recovery in the medium to short-term.
Looking ahead, Solana could potentially break its downward trend by surpassing key resistance levels and aiming for milestones like $180 and $200. Technical indicators such as RSI and MACD suggest a positive outlook for Solana’s price trend. However, external factors such as trade tensions, inflation, and regulatory developments could impact Solana’s trajectory in the coming weeks.
In conclusion, the upcoming period is crucial for Solana as it navigates through market uncertainties and strives for recovery. The interplay of various factors, including Bitcoin’s price trend and macroeconomic events, will play a significant role in determining Solana’s future direction. This article serves as an educational overview and does not constitute investment advice.