Traders are increasingly positioning for a drawdown in Solana’s native SOL (SOL) coin as sentiment plummets amid mounting memecoin scandals on the network, according to data reviewed by Cointelegraph. 

According to data service Coinalyze, the ratio of long to short SOL positions on cryptocurrency futures exchanges dropped from 4 to 2.5 on Feb. 17, implying a marketwide tilt toward bearishness on SOL.

“The market has decided it is angry at Solana,” Tyler Durden, a pseudonymous cryptocurrency influencer, said in a Feb. 17 post on the X platform. 

Citing figures from Binance’s perpetual futures trading platform, Durden said Binance’s ratio of short to long positions had risen to 4-to-1, indicating an overbalance of bearish bets.

Perpetual futures, or “perps,” are derivatives that let traders buy or sell an asset at a future date with no expiration. 

The price of SOL is down nearly 6% on the day as of the time of publication, according to CoinGecko. 

Related: Solana 24-hour DEX volume beats Ethereum, Base combined

Souring on memecoins

The sudden rise of memecoins such as Bonk (BONK) and Dogwifhat (WIF) drew billions of dollars into the Solana ecosystem. 

Both dog-themed memecoins topped $4 billion in market capitalization before retracing in December and January, according to data from CoinGecko. One US exchange-traded fund issuer has even proposed creating a BONK ETF.

In the fourth quarter of 2024, application revenues on Solana increased by 213%, primarily due to memecoin speculation, according to a report by crypto research firm Messari. 

Now, insider selling and huge losses for retail are souring sentiment on Solana’s memecoin ecosystem. 

“The amount of shit thats coming up to the surface now is really badly damaging to SOL ecosystem,” Runner XBT, a pseudonymous trader, said in a Feb. 16 X post. 

On Feb. 14, Libra (LIBRA), a cryptocurrency seemingly endorsed by Argentine President Javier Milei, erased some $4.4 billion in market capitalization within hours of launching. 

Milei initially promoted the coin on X but has since deleted his post. He is now facing lawsuits in Argentina for allegedly misleading investors. 

Since January, traders have lost approximately $2 billion across 800,000 wallets on Official Trump (TRUMP), US President Donald Trump’s official memecoin. 

The fully diluted value of TRUMP is down roughly 75% from highs of more than $70 billion to around $17 billion as of Feb. 17, according to CoinGecko. Roughly 80% of TRUMP’s supply is held by insiders. 

The TRUMP launch was “the clearest possible example of the insider game reaching its apex,” Westie, a Blockworks research analyst, said in a Feb. 16 article on X.

Solana continues to generate more revenue than Ethereum, the largest layer-1 network by total value locked, despite the memecoin trading slowdown, according to data from DefiLlama.

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