The crypto market is faltering this week, and Solana is stumbling more than most as a cooling memecoin craze depresses coin prices to their lowest level in several months.
The crypto market overall is currently down after last week’s historic ByBit Bitcoin is down 12% in the last seven days, Solana is down 22%, hitting its lowest price this year and a new five-month low.
The drop was fueled by the coin’s association with celebrity-backed memecoin scandals, including $LIBRA, the cryptocurrency that quickly exploded to a nearly $5 billion market cap before crashing after it was promoted by Argentine president Javier Milei. The bust outraged investors and prompted an investigation into Milei's involvement with the token.
The $LIBRA incident “punctuated a period of very high activity among Solana memecoins that probably will discourage other political leaders from launching memecoins for now,” says Zach Pandl, head of research at crypto asset manager Grayscale. He adds that while memecoins are a permanent fixture of the crypto world, “the current phase of memecoin trading on Solana is over.”
Solana became the premier blockchain for memecoin development because of its low transaction costs, high transaction speed, and user-friendly infrastructure, according to Pandl. It also became the go-to blockchain of choice for memecoins when Pump.fun, a memecoin creation platform, made it easier to create cryptocurrencies on Solana.
At its peak, Pump.fun launched more than 71,000 memecoins in one day. But that number fell to just 26,000 on Tuesday, according to data from analytics firm Dune.
While most memecoins don’t have intrinsic value and are often associated with scams and rug pulls, Pandl says that the recent memecoin frenzy wasn’t all bad, and had specific benefits for the Solana ecosystem.
“It onboarded users. It generated revenue. It helped us stress-test the Solana blockchain in a variety of ways,” he said. “In that sense, memecoin trading is one of the many building blocks to developing the next-generation financial infrastructure that we're all working on."
