• Solana's price has dropped over 30% since mid-February, impacted by FTX-related liquidations, large token unlocks, and declining network activity.
  • Institutional purchases of discounted SOL tokens contrast with concerns over ongoing sell-offs, a 99% drop in transfer volume, and liquidity outflows.
  • Solana's price has dropped over 30% since mid-February, impacted by FTX-related liquidations, large token unlocks, and declining network activity.
  • Institutional purchases of discounted SOL tokens contrast with concerns over ongoing sell-offs, a 99% drop in transfer volume, and liquidity outflows.

Solana (SOL) has experienced significant market fluctuations in recent weeks, driven by selling pressure, declining network activity, and liquidations linked to the FTX bankruptcy estate. The cryptocurrency's price, which reached a high of $224 in February, has since dropped to as low as $140.

On March 1, approximately 11.2 million SOL tokens, valued between $1.57 billion and $2.03 billion, entered circulation. Unlike typical vesting releases, these tokens originated from FTX's bankruptcy proceedings, raising concerns about immediate liquidation to meet creditor obligations. The sale of these assets has contributed to bearish sentiment, with large transfers to exchanges further intensifying market uncertainty.

Solana’s price decline has been notable, with the cryptocurrency falling over 30% since mid-February and breaking key support levels. On February 27, SOL dropped below $168, and by the next day, it had fallen further to $144. This decline coincided with a 2.24 million SOL ($324.62 million) transfer to Coinbase, sparking speculation about large-scale sell-offs.

Arthur Cheong, founder of DeFiance Capital, commented on the situation, stating:

"Participated in the SOL OTC deal at $64 via Galaxy and received the bullet unlock today. Not selling a single one of them. I think it will be substantially higher in 3 months.”

Despite such confidence from some investors, analysts caution that ongoing liquidations from FTX’s estate or institutional investors could push SOL's price below the $125-$130 range, which has been identified as the next potential support level.

FTX’s liquidation process has significantly impacted Solana’s market movements. Institutional buyers, including Galaxy Digital, acquired large amounts of SOL at discounted prices, with Galaxy purchasing 25.5 million SOL at an average price of $64 per token.

Although these investors have seen gains at current prices near $143, further sell-offs remain a possibility. The FTX bankruptcy proceedings have incurred over $1 billion in legal fees, increasing the pressure to liquidate assets for creditor repayment, which may lead to additional sales in the near future.

Beyond price fluctuations, Solana’s on-chain activity has declined significantly. According to data from Glassnode, Solana’s transfer volume has dropped by 99%, from $1.99 billion in November 2024 to just $14.57 million in February 2025.

The Total Value Locked (TVL) in Solana’s DeFi ecosystem has also fallen below $9 billion for the first time since late 2024, with over $500 million in liquidity reportedly moving to competing blockchain platforms.

Edited by Harshajit Sarmah