Solana has experienced a dramatic decline in total value locked (TVL), shedding over $5.26 billion from its peak. The chain, once considered a strong contender in the DeFi space, has seen its TVL fall nearly 50% to $6.939 billion. A major contributor to this decline is the collapse of Solana-based meme coins, which once fueled optimism but are now struggling to recover.

The broader market downturn has further exacerbated Solana's troubles. Over the past month, top protocols on the chain have suffered up to 40% TVL losses. The crash was triggered by Bitcoin’s flash drop, controversies surrounding tokens like Melania Meme and Libra, and a general risk-averse sentiment among traders. With U.S. macroeconomic conditions tightening, investors are shifting capital away from speculative assets, including meme coins.

Despite these challenges, there are signs of resilience. Solana’s meme coin market is showing slight recovery, with total market capitalization climbing to $8.949 billion. However, some of the biggest tokens, including Trump and Bonk, remain in decline. More than half of Solana-based meme coins have recorded double-digit losses over the past week, indicating a shift in trader attention to other crypto categories.

Market analysts point to recent events as key drivers of Solana's volatility. The launch of Trump-associated meme coins, which led to liquidity drains and significant losses, has negatively impacted investor sentiment. However, some bullish catalysts remain. The CME Group’s announcement of Solana futures and MetaMask’s upcoming native Solana support could provide a boost to the ecosystem.

Bitcoin’s recovery is another factor to watch, as SOL and BTC share a strong 0.83 correlation over a three-month period. If Bitcoin reclaims $95,000 and targets $100,000, Solana could see a positive spillover effect.

On-chain data suggests early signs of a potential rebound for SOL. After weeks of bearish sentiment, Solana’s funding rate on Binance turned positive, indicating renewed investor confidence. Open interest in SOL derivatives has also climbed past $2.26 billion, signaling a possible shift in market direction.

Technically, Solana is at a critical juncture. A daily candlestick close above the resistance zone between $147.09 and $166.42 could mark the beginning of a breakout. If SOL surpasses $180, it may pave the way for a rally toward $200. Indicators such as RSI and MACD also support the possibility of a bullish reversal.

Ryan Lee, Chief Analyst at Bitget Research, highlighted the impact of recent geopolitical and economic events on Solana’s trajectory. According to him, Trump’s new tariffs on China, Canada, and Mexico have rattled markets, exacerbating Solana’s 40% TVL decline. This, combined with the Bybit hack and Bitcoin ETF outflows, has weighed heavily on investor sentiment.

Looking ahead, Solana’s future largely depends on macroeconomic conditions and Bitcoin’s price movement. If trade tensions persist and inflation remains high, SOL could face further stagnation. However, if market conditions stabilize and bullish catalysts like MetaMask integration materialize, Solana could stage a recovery in the coming weeks.