Solana Could Be In For A Rude Awakening

Solana has made a lot of people rich. There’s no denying that. If you bought SOL at its lows and held, you’ve seen insane returns. It’s been one of the best-performing assets in crypto over the past few years, cementing itself as a major player in the space.

But just because something performed well in the past doesn’t mean it’ll continue dominating in the future. And right now, there are real reasons to be skeptical about Solana’s ability to outperform in 2025.

There are still things to like, such as fast transactions, low fees, and a strong community, but the problems are stacking up even more than concerns about decentralization and tokenomics. Memecoin rug pulls, looming token unlocks, inflation concerns, and increasing regulatory scrutiny could weigh on SOL’s price action moving forward leading some of its chart to show unfavorable conditions.

First, let’s give credit where it’s due. Solana has been a beast going from under $1 to over $250 in the 2021 cycle, then crashed to $8 in the bear market, only to skyrocket past $200 again in the latest run. With a theoretical throughput of over 65,000 transactions per second, Solana remains one of the fastest blockchains out there, and transactions cost pennies, making it a go to for memecoins, on-chain trading, and defi.

I think countless people will continue to make money on SOL and within the Solana ecosystem, but the cracks are starting to show in 2025 just like they did in 2021.

2021 had FTX. 2025 has memecoins.

The LIBRE Argentina Memecoin Rug Pull

One of the biggest black eyes for Solana recently has been the LIBRE Argentina memecoin debacle. Here’s what went down:

• Argentina’s president, Javier Milei, indirectly pumped LIBRE – The token exploded in price as people speculated it was tied to Milei’s libertarian movement.

• The team behind LIBRE rugged hard – Insiders pulled over $107 million from liquidity pools, causing a 94% crash within hours.

• Solana’s reputation took a hit – Another high-profile rug on Solana made people question the quality of projects launching on the chain.

Memecoins have been a huge part of Solana’s recent success, but they’re also its biggest liability. As these scams become more common, retail investors are viewing Solana as a playground for pump and dumps rather than a serious blockchain for long-term growth. I personally don’t want this narrative bleeding into the rest of the crypto market, and I think we all know that this is what Solana thrives on, unfortunately.

There’s almost an unspoken rule within the crypto space that Solana is simply the memecoin chain. Unfortunately for high profile government officials who aren’t in the crypto weeds daily, they might not be privy to that kind of information.

It’s hard to tell what the president of Argentina was doing, where the confusion was, and what will come of this, but currently government authorities are upset and legal action might be taken.

Oh and this is just one major thing happening on Solana right now.

Solana Inflation and the FTX Token Unlocks

After the LIBRE and memecoin issues that Solana is facing there is another problem with SOL’s tokenomics: More supply is about to hit the market. A lot more.

• FTX still holds billions in SOL – The bankrupt exchange is set to unlock and liquidate around $2 billion worth of SOL in March of 2025. That’s a massive amount of sell pressure.

• Solana is an inflationary asset – Unlike Bitcoin, which has a fixed supply, SOL has ongoing emissions, meaning new tokens are constantly being added to circulation at a rapid pace.

• Potential for price suppression – With FTX liquidating its holdings and Solana’s native inflation, it’ll take a lot of demand just to keep SOL’s price stable, let alone send it higher.

This is a real issue. If you’re holding SOL, you need to ask yourself: Who is buying enough to absorb all this new supply and how does a massive increase in circulation of SOL affect my bags? If the answer isn’t clear, it’s a reason to be cautious.

Below you can see the amount of SOL being unlocked on certain dates, and March 2025 is going to be a big one. This also doesn’t even factor in the $2 billion in unlocks coming from the FTX releases (11 million SOL) also happening in March.

The SEC’s Crackdown on Memecoins

Another potential headwind for Solana is regulation. The SEC has ramped up its focus on crypto fraud, and memecoins by creating the Cyber and Emerging Technologies Unit, which will focus on crypto, AI, and cyber based fraud.

For far too long it seems like memecoin ruggers have gotten away with fraudulent activites, and now that tide could be shifting. Most memecoins fall under the guidance of unregistered securities that do not provide adequate, fair information on insiders and holdings. In all fairness, all chains will have to adopt and meet new standards, and memecoins all over the crypto world will have to bend their knee to the new government rules, which is good.

If this new SEC task force puts a heavy hand on these activities, we could see a massive shift in how memecoins are launched, what that means for the pump fun era of crypto, and what primary role Solana takes in the crypto industry.

Those are 3 massive ideas and themes that could be affecting how Solana operates in 2025, but no good analysis is done without looking at the charts. Oddly enough, the charts share the same sentiment that SOL could be going downwards for longer.

Solana is currently falling against BTC, and looks like it might continue for months on end towards the range low or the Fibonacci low at the 0.786.

Solana’s dominance in the total crypto market cap has fallen below its monthly bull market support band for the first time since 2022. Last time it fell below this band it dropped 70%-80% for its dominance in the total crypto space.

Solana’s market cap has increased 64% since 2021 while its price has only increased 14%. This is calculated from the 2021 high to the current 2025 high, and it showcases how inflation of the SOL token will reduce the ability for token price to continue higher as market cap increases.

Finally, Solana has been falling against some altcoins, like Cardano, over the past few months, showcasing that other assets are rising faster than SOL is for investors. This is probably due to the massive rally SOL had in 2024 while the rest of the market was growing slower, but now it’s time for the rest of the market to outpace Solana.

So what am I saying? Am I saying that Solana is horrible and nobody should buy it?

No.

I am saying that investors who buy SOL should recognize the risks that Solana seems to have surrounding it and weigh whether that risk is applicable for their investment style. For me, it simply isn’t, especially at the current price levels that SOL is at.

I think that retail investors can get more bang for their buck in altcoins that haven’t moved as well as SOL so far this cycle, and they can lower their risk profiles by investing into assets that protect retail investors with more retail friendly fundamentals and tokenomics.

We will have to watch and see how this all plays out for Solana as new regulations roll into the crypto world. I assume that holders of SOL will still make money, people will still release memecoins, and I will still avoid Solana if I can.

Everyone’s opinion can be right, and I think the best thing you can do is ask yourself what you’re willing to take the risk on.

There is definitely a right and wrong way to do memecoins, and lets hope the crypto space can get on the right side of things.

Thanks,

Dawson