Solana (SOL) is facing significant selling pressure, with its price dropping by 9.3% today, moving to $166. The decline comes amid a reduction in network activity and bearish sentiment, compounded by a looming token unlock event scheduled for March 1, 2025.
Network Activity Plummets
Recent on-chain data shows a sharp decline in Solana’s network activity, which has contributed to the negative price movement. Crypto analyst Ali Martinez reported that active addresses on the Solana network have dropped by almost 55% since November 2024, falling from 18.5 million to 8.4 million. This reduction signals a slowdown in user engagement and transaction volume, which has also dropped drastically from $2 billion in November 2024 to just $26 million today.
Bearish Sentiment and Price Pressure
Solana has been in a bearish trend since the start of 2025, shedding more than $80 since its January 2025 peak. Analysts, including IncomeSharks, have warned that the price action is not part of a typical bullish consolidation but rather signals a “blow-off top”. With Solana failing to hold critical support at $175, it faces the risk of a further correction, with analysts predicting a possible drop to the $160 level in the near term.
Token Unlock Set to Increase Circulating Supply
The significant token unlock event set for March 1 is adding to the uncertainty surrounding Solana. Over the next few months (February, March, and April 2025), 15 million SOL tokens—valued at over $7 billion—will be released into circulation, increasing the overall supply of SOL and potentially diluting its price. This event has many investors on edge, as the upcoming influx of tokens could lead to further selling pressure in the market.
With Solana’s current inflation rate of 4.715%, this increase in circulating supply is expected to weigh heavily on the token’s price over the coming months. The possibility of large institutional investors, such as Galaxy, Pantera, and Figure, realizing substantial unrealized gains from the token unlock only adds to the market’s concerns.
Caution Advised for Solana Investors
Market analysts and crypto traders are urging caution for those considering investing in Solana in the short term. The combined effects of dwindling network activity, bearish market sentiment, and the upcoming token unlock could continue to exert downward pressure on the price of SOL.
In light of these factors, some experts are advising investors to stay away from Solana for now until the effects of the unlock event subside and network activity shows signs of recovery. While positive developments, such as the potential approval of a Solana ETF, could act as a catalyst for a rebound, the short-term outlook for SOL remains uncertain.
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