Solana [SOL] faced a rough ride in May, dropping nearly 10%—underperforming most other top-tier cryptocurrencies. But as broader market conditions begin to stabilize, SOL has clawed back approximately 5%, signaling a potential rebound. Strategic investors appear to be repositioning, eyeing the $164 resistance level as a critical breakout zone. Yet, this bounce comes amid deeper structural concerns, particularly surrounding Solana’s liquidity dynamics.
Thin Liquidity Supports the Rally—for Now
Solana’s recent $10 billion “burn” may seem bullish at first glance, but it’s not the traditional supply reduction seen in other Layer 1 ecosystems. Instead of enhancing scarcity, much of this value has been siphoned from the network through short-term memecoin launches like those on Pump.fun, which alone absorbed over $700 million in SOL. These projects tend to attract fast capital but rarely recycle value back into Solana’s core DeFi stack.
Adding to the drain, Maximal Extractable Value (MEV) strategies have reportedly skimmed up to 30% of daily Total Value Locked (TVL) during peak periods. The result? Solana is operating under a net liquidity loss, with more value exiting the ecosystem than entering. This is especially troubling as the $10 billion “burned” surpasses Solana’s current TVL of $8.822 billion.
Market Optimism Masks Long-Term Risks
Despite the recent price uptick, long-term structural cracks are beginning to show. AMBCrypto highlights declining HODLer conviction and ongoing liquidity bleed as signs of fragility in the market structure. Solana recently broke through two key support levels, sliding to $140 amid fresh market fear. While a push to reclaim $164 is still possible, it’s becoming increasingly clear that SOL’s current momentum may be riding on hype rather than solid fundamentals.
Unless liquidity trends reverse and capital begins to cycle back into Solana’s DeFi ecosystem, the current rally could prove short-lived. With more value being extracted than reinvested, Solana’s foundation appears increasingly vulnerable to sentiment shifts—raising serious questions about the sustainability of its upward price action.
Also Read: Solana ETF Launch on Nasdaq: A Major Step Toward Spot ETF Approval?
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of CoinBrief.io. Before making any investment decisions, you should always conduct your own research. Coin Brief is not responsible for any financial losses.
