Solana Faces 29% YTD Decline Despite Strategic Reserve Inclusion and Liquidity Surge
Solana (SOL) is currently trading around $127, down 7.30% in the past 24 hours, continuing a downward trend that has plagued the cryptocurrency since the beginning of 2025. Despite being one of only three altcoins included in President Trump’s Digital Asset Stockpile, Solana SOL/USD has failed to capitalize on what many investors expected would be a significant bullish catalyst.
Solana’s Strategic Reserve Inclusion Fails to Reverse Downtrend
Though Solana is revered in the US Digital Asset Stockpile with Cardano (ADA) and XRP, it has dropped around 29% since the start of 2025. Although SOL has been fighting against more general market headwinds, the Trump administration’s endorsement through this program was much expected to give considerable pricing support for the chosen assets.
Most importantly, SOL has dropped about 49% since the January 18 debut of the Official Trump (TRUMP) token, from $261 to its present pricing. This sharp drop implies that the Trump token release might have drawn large funds away from already-existing cryptocurrencies.
“Most of the inbound liquidity was outflow from other crypto assets, people selling their crypto portfolio to buy TRUMP in extreme FOMO,” said Dan Hughes, inventor of the distributed finance platform Radix.
Massive Liquidity Injection Redirected to Memecoins
According to crypto intelligence site Lookonchain, Solana’s ongoing drop is especially confusing given the injection of nearly $9.5 billion worth of freshly produced USDC stablecoins into the Solana ecosystem since January 1.
According to market observers, rather than helping SOL’s price, much of this additional liquidity has gone into the memecoin sector. Because of its fast speed and cheap transaction fees, the Solana blockchain has been the ideal venue for memecoin launches; hence, a situation whereby the popularity of the network for token launches has not translated into market support for its native currency.
Capital Outflows and Flight to Safety
Large capital outflows have aggravated Solana’s downward pressure even more. Based from a Binance Research analysis, Solana saw approximately $485 million worth of withdrawals in February alone, with investor cash mostly going to Ethereum, Arbitrum, and BNB Chain.
With Bitcoin’s dominance rising by 1% in the past month to 59.6%, this migration seems to be a part of a larger “flight to safety” in cryptocurrency markets. The trend has especially been noticeable after many well-publicized Solana network frauds.
Supported by Argentine President Javier Milei, the Libra token became most infamous. Allegedly siphoning over $107 million worth of liquidity in a rug pull, project insiders allegedly caused a 94% price drop in hours and destroyed about $4 billion in investor cash.
Institutional Developments May Provide Future Support
Looking forward, some institutional changes could perhaps turn Solana’s fortunes around. The most important is Solana futures by CME Group’s planned later this month debut. Many view this development as a stepping stone toward a possible Solana exchange-traded fund (ETF) in the United States.
Solana validators also are looking at a suggestion to apply a fresh dynamic inflation model. Aiming to maximize staking incentives and guarantee network stability, the Solana Improvement Document, SIMD-0228 Critics of this idea, however, contend it may centralize network authority, therefore generating conflict within the community.
Already stopping the burning of half of Solana’s priority fees, SIMD-0096, another recent monetary policy adjustment done in February, Blockworks Research analyst Carlos Gonzalez Campo claims this shift has raised Solana’s annualized inflation from 3.7% to 4.6%.
Competitive Pressure from Bitcoin and Ethereum
Both Bitcoin and Ethereum provide Solana increasing competition as well. With Bitcoin’s security and first-mater advantage giving it superiority as “better money,” Ordinal co-founder Casey Rodarmor recently said that “Ethereum is getting squeezed by Bitcoin and Solana,” while Solana’s speed and scalability challenge Ethereum’s position as the top smart contract platform.
SOL/USD Technical Indicators Show Mixed Signals
Despite the overall bearish trend, some technical indicators suggest a potential shift in momentum. The TD Sequential indicator has reportedly flashed a buy signal on the four-day chart, hinting that selling pressure may be weakening.
The Relative Strength Index (RSI) currently stands at 38.71, indicating that Solana may be approaching oversold territory. Historically, such conditions have often preceded rebounds, leading some analysts to predict a potential recovery by late March or early April if broader market sentiment improves.
SOL’s immediate resistance level sits at $140, with the next target at $150 if a breakout occurs. However, current support at $130 remains crucial; a breakdown below this level could push prices toward $125, potentially triggering another round of liquidations.
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals