Solana could fall more than 50% for these three reasons

The price of Solana (SOL) rose 4.3% on Wednesday (04), but soon fell again and recorded losses of 3.3% this Thursday (05). This movement occurred due to the market situation, which remains difficult for most cryptocurrencies.

Over the past six months, Solana’s price has fluctuated between highs of $210 and lows of $122. According to CoinGecko, the cryptocurrency is worth $130 as of press time. Even if there is no trend dominance, SOL could see a drop that takes its price down to $50.

And many of the reasons for this devaluation are not in the network itself, but in external factors. Now, let’s look at three of these factors and how they can negatively impact SOL.

Bitcoin Drop

To this day, the cryptocurrency market is heavily influenced by Bitcoin (BTC), which is the largest of all. And since reaching its all-time high in March, BTC has been in a sideways zone.

After BTC dropped to $56,000, memecoins faced a significant drop due to their volatile nature. It is worth noting that one of the main factors that drove SOL’s price in 2024 was the growth of memecoins.

As such, the drop in interest in these tokens directly impacts Solana’s user engagement and trading volume. With fewer investors purchasing memecoins, the network could suffer a significant loss in demand that would contribute to a price drop.

Solana suffers from competition from Tron

In addition to the drop in demand, Solana may face another problem: increased competition. With the success of its memecoins, other networks have decided to explore this market and launch their own meme coin creation platforms.

The latest move comes from the Tron network, which launched SunPump as a direct competitor to Solana’s memecoin generator Pump.fun. This “memecoin war” has seen Tron gain traction, with several successful memecoins created on the network since August. On the other hand, SunPump has significantly drawn liquidity away from the Solana ecosystem.

Such an event where one protocol lures users away from another with a better incentive program is called Vampire Attract. In other words, Tron – and other networks, such as TON – can siphon resources from Solana and reduce demand for SOL.

EtherVista

Ethereum, Solana’s strongest rival, was late to the memecoin race, but it’s ready to make up for lost time. To that end, the network recently launched a new decentralized exchange, EtherVista, which went live this week.

The project offers custom token launch parameters and revenue sharing incentives to bring in long-term liquidity providers. Additionally, it has its own token (VISTA) that provides liquidity to DEX users.

If Ethereum succeeds against EtherVista and continues its dominance, the growth opportunity for Solana’s price may diminish, reducing the strength of demand.

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