What does Meme Coin bring to the current crypto market?

Data shows that traders are increasingly preparing for a drop in Solana’s native SOL (SOL) token as the network’s memecoin scandals continue to grow and market sentiment plummets.

According to data service Coinalyze, on February 17, the ratio of long to short SOL positions on cryptocurrency futures exchanges fell from 4 to 2.5, meaning that the entire market tends to be bearish on SOL.

“The market has decided to be mad at Solana,” anonymous cryptocurrency influencer Tyler Durden said in a Feb. 17 post on Platform X.

Citing data from Binance’s perpetual futures exchange, Durden said Binance’s short-to-long position ratio has risen to 4:1, indicating an excess of bearish bets.

Perpetual futures, or “perps,” are a type of derivative that allow traders to buy or sell an asset at a future date with no expiration date.

As of the time of publishing, the price of SOL is down nearly 6% on the day, according to CoinGecko.

Short positions on Binance outnumber long positions. Source: Tyler Durden

Unhappy with Memecoin

The sudden rise of memecoins like Bonk and Dogwifhat has attracted billions of dollars to the Solana ecosystem.

Both dog-themed memecoins had market caps of more than $4 billion each before retreating in December and January, according to Coingecko. One U.S. exchange-traded fund issuer has even proposed creating a BONK ETF.

According to a report from crypto research firm Messari, application revenue on Solana grew 213% in the fourth quarter of 2024, largely due to memecoin speculation.

Now, insider selling and massive losses among retail investors are undermining confidence in Solana’s memecoin ecosystem.

“The amount of shitcoins out there right now is really hurting the SOL ecosystem,” anonymous trader Runner XBT said in a Feb. 16 X post.

LIBRA lost $4.4 billion in market value in a few hours. Source: Kobeissi Letter

Libra (LIBRA), a cryptocurrency seemingly backed by Argentinian President Javier Milei, lost around $4.4 billion in market value in the hours following its launch on February 14.

Mile initially promoted the token on X but later deleted his post. He is now facing a lawsuit in Argentina for allegedly misleading investors.

Traders have lost around $2 billion since January in 800,000 wallets holding US President Donald Trump’s official memecoin (TRUMP).

According to CoinGecko, the fully diluted value of TRUMP has fallen about 75% from a high of over $70 billion to around $17 billion as of February 17. About 80% of TRUMP’s supply is held by insiders.

Westie, a Blockworks research analyst, said in a Feb. 16 article for X that the launch of Trump’s meme coin is “the clearest example of insider gaming reaching its peak.”

Despite the slowdown in memecoin trading, Solana’s revenue still exceeds that of Ethereum, the largest Layer 1 network by total locked value, according to DefiLlama.