Solana’s price has become a toxic digital asset, as crypto investors remain concerned about the number of rug pull and pump-and-dump schemes in its ecosystem. The SOL token has crashed amid concerns about its inflation metrics due to daily unlocks, plunging to a low of $160, the lowest level since November 6.
Rug pull scams and daily token unlocks
The Solana price has crashed as concerns about the number of scams in its ecosystem have risen. One of the most notable scams involves creating Solana meme coins, pumping them, and then selling them, leaving ordinary investors holding the bag.
One of the most notable launches was the Official Trump (TRUMP) coin, which occurred a day before his inauguration. It surged to over $70 and then crashed below $20 as insiders and early buyers, known as snipers, dumped their tokens. A similar situation occurred with the First Lady’s Melania meme coin.
Most recently, Javier Milei, the president of Argentina, promoted the Libra token, which then crashed, leading to substantial losses.
These rug pull scams have become highly popular because of the ease of creating Solana meme coins using Pump.fun. Indeed, data from SolScan indicate that thousands of new Solana meme coins are launched every day.
Most Solana meme coins have crashed, lowering the market cap of these tokens from over $25 billion in January to $10 billion today. Their crash has also led to a big dip in Solana DEX volume.
Investors are concerned that the prevalence of these scams will cause more users and developers to avoid Solana in the future.
The other main reason the Solana price crashed is an upcoming $1.8 billion token unlock related to the FTX bankruptcy. Additionally, Solana is highly inflationary, releasing over 40,000 tokens daily, valued at over $6 million.
Solana price forecast
SOL price chart by TradingView
The daily chart shows that the SOL price continues to crash this week. It has dropped below the ascending trendline, connecting the lowest swings since August last year. Solana has also plunged below the key support at $170, the lowest swing on January 13.
It is also about to form a death cross pattern as the 50-day and 200-day weighted moving averages are about to cross each other. Therefore, the path of the least resistance for the SOL price is highly bearish. The next target is $110, the lowest point in July last year, which is about 35% below the current level.
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