Solana finds itself at a challenging crossroads. Forced sales and exits by long-term holders are putting pressure on the price and thinning out order books. Jina identifies the root causes as layered leverage, MEV extraction, and a regulatory overhang that is straining both retail traders and institutional treasuries. Despite the mounting pressure, there’s a notable bright spot: tokenized real-world assets on Solana have reached a $500 million milestone, signaling that builders are persisting through the price decline.
Drivers of the Drawdown
The first major driver is a wipeout of leveraged long positions. Liquidation cascades are hitting from both sides and creating a self-reinforcing cycle. MEV bots intensify this stress, scanning for arbitrage opportunities and under-collateralized accounts, which amplifies the downward pressure. Jina notes a specific instance where a 76.8% transaction failure rate was tied directly to bot spam, eroding user trust and clogging the network. At the same time, wallets that held SOL for months are finally selling into the dip as key support levels at $200 and $180 break. This is compounded by a broader, cross-asset liquidation event of nearly $1 billion that spilled over into Solana. Offsetting some of this pain is the continued growth of tokenized real-world assets, which now total $500 million on the chain, proving developer activity continues despite market conditions.
For context, MEV (maximal extractable value) refers to profits that validators or searchers can secure by reordering, inserting, or even dropping transactions within a block. This dynamic becomes particularly intense during market stress, compounding issues like slippage, delays, and failed transactions that undermine user confidence.
Consequences and Watchlist
The consequences are clear: holder exits are reducing market depth, opening the door for faster and more severe price swings. Network congestion and failed transactions repel new users, while the lingering question of a security classification keeps many institutions on the sidelines. Treasury departments face volatile marks and expensive hedges, and fragmented liquidity raises execution risks.
In short, liquidity is thinning and volatility is jumping following mass liquidations.
MEV-driven congestion raises the network’s operational risk.
Sales from long-term holders and regulatory uncertainty are cooling overall demand.
On the positive side, the uptake of RWAs and talk of a potential spot SOL ETF may eventually attract new inflows.
The watchlist is short. Jina highlights a potential spot ETF as the next likely catalyst for significant flows. Until then, traders are watching to see if the price can reclaim its lost support zone and if MEV-related network traffic subsides, as both would help ease execution and rebuild confidence.
In sum, near-term flows will be steered by improvements in market structure and clearer policy signals. If liquidity depth returns and MEV congestion abates, participation could stabilize. Until then, market positioning remains highly sensitive, with the steady momentum in RWAs offering a constructive counterweight to the negativity.
