Amid a broader downturn in the cryptocurrency market, with and facing declines, the price has also seen a sharp pullback. The token's value dropped to a critical support level of $164, sparking discussions about whether Solana (SOL) can maintain its upward trajectory or if more declines are on the horizon.
Solana's price drop could extend on news that the US Securities and Exchange Commission (SEC) is investigating crypto companies in its investigation of Ethereum. Increased regulatory concerns could cause a deeper pullback in SOL price.
Solana has caught the attention of investors this month after its price surpassed $200 for the first time since November 2021. The weekend saw a notable spike in Solana network activity, surpassing even Ethereum in terms of total trading volume.
On March 16, Solana's trading volume reached $3.52 billion, eclipsing Ethereum by $1.1 billion. This rise was largely driven by increased demand for Solana-based memecoins, with the recently launched Book of Meme (BOME) memecoin reaching a market capitalization of $1.45 billion in just 56 hours.
Solana's decentralized finance (DeFi) sector has grown dramatically, with its total value locked (TVL) increasing by over 80% in the last month. This accelerated growth has lifted Solana's DeFi TVL to its highest point in two years, positioning it among the top five DeFi networks by TVL.
Despite the recent decline in trading volume, Solana's market capitalization reached $91.56 billion. The cryptocurrency has also seen a 9.05% increase in open interest to $3.2 billion, although short traders have dominated liquidations in an effort to mitigate losses from the current price rally.
Elsewhere, the Solana community has begun to speak out against the pre-sale of meme coins, which has become a more prevalent and questionable practice. In these pre-sales, cryptocurrency traders often send large sums of money to unknown people, hoping to get in early on the next big thing like BONK, WIF or BOME.
Following the multi-million dollar rises of several Solana-based meme coins over the past three months (a trend that has propelled the blockchain back into the spotlight), many crypto influencers have begun to capitalize on the frenetic FOMO atmosphere. They are offering discounted early allocations of certain meme coins before their release to traders who send SOL to promoters' wallets.
