Solana's DeFi activities took a hit as the value of the BONK token fell. However, its performance in NFTs has been positive.
Solana [SOL] witnessed a significant drop in decentralized finance (DeFi) activity in February. According to data from DeFiLlama, total value locked (TVL) on the network remained flat for most of February before falling below $250 million.
And that's not all. The total volume of all Decentralized Exchanges (DEX) on the Solana network has been gradually decreasing each week.
At the time of publication, the total for the past seven days was just over $280 million, indicating a drop of nearly 20% week-over-week (WoW).
Is the "joke" over?
The launch of the dog-themed token Bonk [BONK] last December has energized the Solana ecosystem.
As part of the marketing strategy, half of the 100 trillion tokens were given away for free to the community, including NFT developers and creators. This created massive hype for the meme coin, resurrecting Solana's activity.
However, with the drop in BONK's key metrics, Solana felt uneasy. Consider: BONK has lost nearly 25% of its value in the last seven days of data from CoinMarketCap.
Data from Dune Analytics showed that the number of daily active users and the number of transactions are constantly decreasing.
Initially, Solana-based DEXs like Orca attracted a large volume of trading pairs involving BONK. But with the fall in the value of BONK, its volume has decreased. This explains the drop in Solana DEX trading volume mentioned earlier.
Solana suffers from negative moods
As BONK fell in value and hype, sentiment on SOL also moved into negative territory, as highlighted by Santiment's weighted sentiment indicator.
However, its performance on the NFT front kept the ecosystem running. The daily trading volume in February quite often reached the mark of 1 million dollars, facilitated by new launches.
In addition, the price of SOL has fallen by more than 10% in the past seven days, according to CoinMarketCap. Support at $20.85 was breached on February 10, but the token has started moving north and is up 3.46% at the time of publication.
The increase in selling activity caused the relative strength index (RSI) to drop below the neutral mark of 50. However, the decline was not strong enough to warrant bearish forecasts.
On-Board Volume (OBV) has started an upward trajectory, implying that buying activity may increase.
This whole episode reaffirms the volatile nature of meme coins, which are built on hype and perception rather than any technology or fundamental principles.