Solana, a popular blockchain platform, has experienced a significant increase in USDC minting since the beginning of the year. A total of 8.75 billion USDC has been minted on the Solana network, leading to a surge in network volume to an all-time high of $27.745 billion. This spike in USDC minting coincided with the launch of the TRUMP memecoin.
However, the recent decline in network volume to just $1 billion has raised concerns about liquidity saturation on Solana. This decline has also been accompanied by double-digit losses in leading Solana-based memecoins. The market cap of SOL, which started February above $100 billion, has now dropped to $72 billion, with persistent sell-side pressure pushing the price below the $140 support level – its lowest point in four months.
The recent minting of 250 million USDC on the network has raised questions about whether increased liquidity can help catalyze a recovery for SOL. However, with meme-sector volume down over 50%, the impact of the newly minted USDC may be limited, potentially constraining SOL’s upside potential.
The current market conditions suggest a growing supply-demand imbalance on Solana, with excess liquidity flooding the market amid declining memecoin demand and trade volume. This imbalance raises concerns that Solana may be transitioning from a long-term value asset to a short-term speculative play.
Despite hitting an all-time high of $295, SOL has struggled to establish strong support levels and has remained in a sustained downtrend. The absence of strong demand in bearish conditions indicates a fragile market structure for SOL. Weak bid-side liquidity continues to limit the bullish absorption of sell pressure, putting the $140 support level at risk.
A recent short squeeze triggered $2.37 million in liquidations, highlighting the speculative nature of the recent rally in SOL. With Solana’s fundamentals showing no significant improvement, the impact of the 250 million USDC remains negligible. Instead of a liquidity-driven rebound, SOL may face a higher probability of retracing towards $125 in the near future.
In conclusion, the recent surge in USDC minting on the Solana network has raised concerns about liquidity saturation and the impact on SOL’s price performance. As the market dynamics continue to evolve, it will be important to monitor how Solana navigates these challenges and whether it can regain its momentum in the cryptocurrency market.