Why is Solana (SOL) price down today?
SOL price is down today as a wider crypto market correction takes place, and investors voice their displeasure with recent airdrops in the Solana ecosystem.
Solana’s native token, SOL , saw a 9% increase on May 9, closing at $155, though it faced stronger resistance than anticipated. By May 10, SOL’s decline to $148 showed that reclaiming the $173 mark—last seen over four weeks ago—would remain a challenge.
Investors express disappointment with recent Solana token launches
Complications arose as several significant Solana-based projects, including Jupiter (JUP), Wormhole (W), Pyth (PYTH), and Helium (HNT), experienced declines of 16% or more in the past five days.
Investor confidence in Solana’s ecosystem appears weakened, so any potential price recovery depends on restoring credibility. Complaints from users include disappointing airdrops, market manipulation of newly launched tokens, and exaggerated stablecoin volumes.
To provide context, SOL’s current market capitalization of $66 billion is 27% lower than its competitor, BNB, which stands at $91 billion. This is a notable shift from April 3, when both cryptocurrencies were valued equally at $83 billion.
This performance disparity is particularly alarming, considering that Changpeng “CZ” Zhao, the founder of Binance, was sentenced to prison on April 30. CZ resigned as CEO of Binance and admitted guilt to a felony as part of a settlement with U.S. authorities, but was later charged with violating U.S. money laundering laws.
Negative sentiment toward some Solana token launches began with the MarginFi incident on April 10. Edgar Pavlovsky, the project’s founder, reportedly attempted to sabotage a planned MarginFi token airdrop, leading to investors withdrawing $412 million in deposits over the following five days.
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More recent disappointment came with the Kamino (KMNO) token launch on April 30. A post by user DeFi^2 on the X social network highlighted widespread dissatisfaction, noting that despite active participation, most users received less than $50.
KMNO token dropped to below $0.04 on its first trading day but later stabilized around $0.06, resulting in a current market capitalization of $270 million. With $1.1 billion held in TVL, the allocation left many investors feeling shortchanged. According to user Steehou on the X social network, the linear distribution model disproportionately favored larger holders, allowing them to leverage their positions and subsequently offload their holdings, exacerbating the issue.
Similar complaints currently surround the launch of the Drift token, a $330 million TVL perpetual futures decentralized exchange (DEX) running on Solana. According to user Kryptolytix on X social network, users face a 50% reduction in their allocation if they claim immediately. User SchizoWaiting added that the team is “threatening to take half away if you claim at the start so they can sell more themselves.”
Visa report makes inflated stablecoin volume problem more apparent
Solana’s trouble were exacerbated by a report from Visa, the world’s leading payment processor, which identified “inorganic activity” in Solana’s stablecoin transactions. In partnership with enterprise blockchain data provider Allium, Visa discovered that over 90% of the tracked stablecoin transactions on Solana were linked to “artificial inflationary practices.”
Cuy Sheffield, Visa’s head of crypto, explained that these dubious transfers are typically used for arbitrage, liquidity provision, and market making, and do not reflect traditional settlement activities. This analysis has led investors to question whether Solana network activity is as robust as it appears, especially since the network’s transaction fees are notably lower than those of Ethereum Regardless of whether transactions on Solana DApps have been artificially inflated, the network’s performance over the past 30 days has not been impressive.
Solana does not rank among the top 8 blockchains by activity and has seen a 34% decline in volume over the last 30 days. Interestingly, during the same period, the market leader Ethereum saw a 3% increase in volumes and a 5% rise in the number of active addresses (UAW).
Given the recent disappointment with airdrops and reduced network activity, there is a growing expectation of further declines in SOL’s prices.
