Solana (SOL) has dropped below the $160 mark for the first time since October 2024, marking a significant turning point in its recent price trajectory. The drop—part of a broader 35% decline over the past month—has pushed the asset to a four-month low, sparking concern among traders and long-term holders alike. As market sentiment turns cautious, a major catalyst looms on the horizon: the scheduled unlock of approximately 11.2 million SOL tokens, valued at around $1.77 billion, from the FTX bankruptcy auction on March 1, 2025.
This upcoming token release has introduced a wave of uncertainty into an already fragile market. With investor confidence wavering and technical indicators leaning bearish, the next few weeks could determine whether Solana regains its footing or continues its descent into deeper support zones.
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Market Performance and Key Metrics
As of February 24, Solana’s price plunged over 7% to $158.46 before slightly recovering to trade around $159.29 within 24 hours—a 6.9% decline. On a weekly basis, SOL is down nearly 13%, reflecting growing pressure from both macroeconomic factors and network-specific developments.
Currently, Solana holds a market capitalization of $78 billion, with a fully diluted valuation of $95 billion. This represents a loss of roughly $10 billion in market cap since late February, underscoring weakening investor appetite amid rising volatility.
Decentralized exchange (DEX) activity on the Solana network has also cooled significantly. According to DeFi Llama, DEX volume fell by 36.7% over the past week, settling at $16.6 billion weekly and $1.5 billion daily. Reduced trading volume often signals declining speculative interest, which can further dampen price momentum.
The $1.77 Billion FTX Token Unlock
The most pressing concern for the Solana ecosystem is the impending unlock of 11.2 million SOL tokens—worth approximately $1.77 billion—originating from the FTX bankruptcy estate auction. These tokens are set to be released on March 1, 2025, and their distribution path remains unclear.
While some of these tokens may be held long-term by institutional buyers, others could enter the market immediately, increasing selling pressure. Historical precedent shows that large token unlocks often coincide with price dips, especially when market conditions are already fragile.
Investors are closely monitoring how firms that acquired these tokens will act post-unlock. Will they distribute, hold, or begin offloading? Their decisions could heavily influence short-term price action and overall market sentiment toward Solana.
Liquidation Waves and Market Sentiment
The recent dip to $160 triggered $21 million in long liquidations across major derivatives platforms. This level now acts as a psychological and technical resistance zone, with additional liquidation clusters concentrated between $120 and $160.
Such dense liquidation zones can amplify downward moves during sell-offs, creating cascading effects where automated margin calls force more selling. Traders are watching this range closely, as a sustained break below $120 could trigger even larger forced exits.
Options data adds another layer to the narrative. Per Amberdata, nearly 80% of block trades in Solana options last week were put contracts—indicating that large players are hedging against further downside risk. Deribit accounted for $32.39 million of the total $130.74 million in SOL options block trades, representing nearly 25% of all activity.
This concentration of protective bets suggests that whales and institutions anticipate continued volatility or potential downside in the near term.
Technical Outlook: Bearish Structure Takes Hold
Technical analysis paints a cautionary picture. After losing critical support in the $167–$169 range, Solana has entered what analysts describe as a structurally bearish phase. Crypto_McKenna, a prominent on-chain analyst, notes that weak buying momentum and deteriorating support levels point to possible further declines.
The next key downside targets lie between $112 and $126. If selling pressure intensifies following the FTX unlock, these levels may be tested in early March. Conversely, reclaiming $167 would be necessary to restore bullish structure and rebuild trader confidence.
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PumpFun’s New AMM: A Potential Catalyst?
Amid the broader downturn, one development could inject new life into Solana’s ecosystem: PumpFun’s beta launch of its own Automated Market Maker (AMM) liquidity pools.
PumpFun, known for powering the meme coin boom on Solana, has introduced a swap interface allowing users to trade SOL directly against newly launched meme tokens. By building native liquidity infrastructure, the platform aims to improve trade execution speed and reduce reliance on third-party DEXs.
Historically, PumpFun has driven significant transaction volume and user engagement on Solana. If its new AMM gains traction, it could boost network activity—even during bearish price conditions—by enhancing liquidity and creating new revenue streams for the platform.
However, the immediate impact on SOL’s price remains uncertain. While increased on-chain usage is generally positive, it may not be enough to counterbalance macro-level sell pressure from large token unlocks.
External Pressures and Negative Sentiment
Beyond internal dynamics, external events have contributed to negative sentiment surrounding Solana. Reports indicate that funds stolen in the Bybit hack are being laundered through Solana-based meme coins—a development that has drawn scrutiny from security researchers and regulatory observers.
Though Solana itself is not at fault, association with illicit flows can harm public perception and deter risk-averse investors. This underscores the need for stronger compliance tools and transparency measures within decentralized ecosystems.
Frequently Asked Questions (FAQ)
Q: Why did Solana drop below $160?
A: The drop was driven by a combination of factors including profit-taking after a strong rally, anticipation of the $1.77B FTX token unlock, reduced DEX volume, and increased put-side options activity signaling bearish sentiment.
Q: What happens when 11.2 million SOL tokens unlock?
A: On March 1, 2025, 11.2 million SOL tokens from the FTX bankruptcy auction will become available. If recipients choose to sell immediately, it could increase supply and exert downward pressure on price.
Q: Can PumpFun’s new AMM help Solana recover?
A: While PumpFun’s AMM may boost on-chain activity and liquidity for meme coins, it's unlikely to single-handedly reverse broader market trends unless paired with positive macro developments.
Q: Is Solana still a good long-term investment?
A: Despite short-term weakness, Solana maintains strong fundamentals—high throughput, growing DeFi and NFT ecosystems, and developer momentum. Long-term viability depends on network resilience and adoption during downturns.
Q: Where are key support levels for SOL?
A: Major support lies between $112 and $126. A break below this range could lead to deeper corrections, while reclaiming $167 would suggest potential stabilization.
Q: How do liquidations affect SOL’s price?
A: When prices fall rapidly, leveraged long positions get liquidated, forcing automatic sell-offs that accelerate declines. With $21M in longs already wiped out near $160, further drops could trigger larger cascading liquidations.
Final Thoughts
Solana stands at a pivotal moment. While fundamental innovation continues with projects like PumpFun advancing ecosystem capabilities, short-term price action remains vulnerable to macro forces and large-scale token releases.
For traders and investors, staying informed about unlock schedules, liquidation zones, and on-chain activity is crucial. As always in crypto markets, volatility creates both risk and opportunity.
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