Solana price tumbled hard on Tuesday morning as a sea of red spread in the crypto market. SOL tumbled to $135, its lowest swing since May 3rd. It has crashed by more than 35% from its highest point this year, meaning it is in a deep bear market.
Scam concerns are rising
Solana, one of the fastest-growing blockchains, has performed well in the past few months as it continued to attract more developers.
Significantly, Solana has not only held its ground but also surpassed established players like Tron and Binance, securing the second spot in the decentralized finance (DeFi) landscape, just behind Ethereum.
Its native DEX networks, such as Raydium, Orca, and Jupiter, have also become highly popular among traders and are the closest rivals to popular Ethereum networks like Uniswap, dYdX, and Curve.
However, there are now concerns that Solana has become the most preferred blockchain network for fraudsters. One of the most popular approaches has been the launch of meme coins, which have exploded recently.
Today, anyone can launch their meme coin using platforms like Pump.fun. Most creators select Solana because its network has faster speeds and low transaction costs.
While this ecosystem growth is good, meme coins have become unregulated scams where people launch tokens, pump them, and then exit their trades.
For example, as we wrote recently, Davido, a Nigerian singer, launched a token, pumped it, and exited with over $400k. Today, the $DAVIDO token has crashed to its all-time low.
Most recently, we have seen celebrities like Andrew Tate and Rapper Iggy Azalea promote their DADDY and MOTHER tokens. As these tokens grew, on-chain data shows that insiders dumped them.
For example, several insiders have dumped the highly popular BEER token, triggering a sharp collapse in its price.
Therefore, there are concerns about the safety of Solana’s network and the impact of these meme coins in the long term. This is one of the reasons why the SOL token has crashed hard in the past few weeks.
What is clear is that Solana’s popularity has led to huge revenue growth in the ecosystem. Data shows that Solana’s fees this year has jumped to over $220 million, making it the sixth most profitable platform after Ethereum, Bitcoin, Tron, Uniswap, and Lido.
Solana price forecast
The daily chart reveals that the price of Solana peaked at $210 earlier this year and has now been in a strong sell-off. It then formed another peak at $188.7 in May.
The token has formed what looks like a double-top chart pattern and crossed the 50-day Exponential Moving Average (EMA). Double-top is a highly popular bearish patterns in the market.
Solana has now found some support at the 200-day EMA. A break below that level will point to more downside as sellers target the key support at $120, the lowest swing in May. A drop below $120 will lead to further downside.
