A memecoin scandal involving Argentine President Javier Milei triggered a sharp drop in Solana’s price, sending it down 20% from last week’s highs.
The controversy stems from Milei’s tweet promoting the LIBRA memecoin, which later fell from a market value of $4.5 billion to around $200 million, leading to legal action being taken against Milei in Argentina, further eroding investor confidence.
Solana’s struggles are reflected in Polymarket prediction rates, where traders are placing just a 22% chance of the coin breaking its all-time high of $293 by June 30, a sharp drop from the 85% chance seen on January 21. Additionally, Polymarket users are predicting an 86% chance of Solana falling to $160 this month.
Memecoins continue to proliferate on Solana’s blockchain, with the pump.fun launch platform generating nearly $3 billion in volume over the past two weeks. While some experts see memecoins as a short-term problem, others argue that they contribute to the network’s long-term growth.
Despite the current downturn, VanEck analysts including Matthew Sigel, Patrick Bush, and Nathan Frankovitz remain optimistic. They predict Solana will reach $520 by the end of 2025. VanEck notes that Solana’s revenue in January 2024 surpassed the next four largest blockchains combined, solidifying its position as the leading layer-1 network in decentralized exchange (DEX) volume, revenue, and active wallets.
They also note the importance of Solana’s share of the smart contract platform market, which currently stands at 15% but is expected to rise to 22% by the end of the year.
Pantera Capital analysts Cosmo Jiang and Eric Wallach see 2024 as a pivotal year for Solana, citing record-breaking trading activity in Q4 2023. Notably, Solana’s native DEX, Raydium, has consistently outperformed Ethereum’s DEX volumes.
“Solana’s tokenization ecosystem continues to thrive,” Jiang and Wallach wrote, adding that it now accounts for over 90% of all new tokens originating on decentralized exchanges.
They also note that despite a 9% decline in the overall crypto industry, Solana’s developer base has grown significantly with an 83% year-over-year increase in monthly active developers. Pantera also sees the potential approval of a Solana exchange-traded fund (ETF) as a key catalyst for future growth.
Matt Hougan, Bitwise’s Chief Investment Officer, suggests that the current pullback could present a buying opportunity. While altcoins are experiencing significant losses, major cryptocurrencies like Bitcoin, Ethereum, and Solana are poised to attract the attention of institutional investors, Hougan argues.
*This is not investment advice.
