Solana Meme Coin Ecosystem Under Fire: Galaxy Research Cites LIBRA Rug Pull As Major Blow

Solana's SOL/USD meme coin sector is under renewed scrutiny after LIBRA LIBRA/USD plummeted.

Galaxy Research highlighted that LIBRA's collapse could further erode confidence in Solana-based speculative assets, which had already been struggling since the launch of the Official Trump TRUMP/USD token in January, Coindesk reported.

The introduction of TRUMP led to a significant shift in liquidity, draining capital from the broader meme coin market and adding to volatility in the ecosystem.

Galaxy Research noted that Solana's recent price gains were largely driven by demand for SOL-denominated assets, particularly meme coins.

The instability caused by LIBRA's rapid rise and fall could reduce investor interest in holding Solana's native token, SOL.

Since the launch of LIBRA, SOL has dropped in value against both the US dollar and Ethereum.

At the time of publication, SOL was trading nearly 10 percent lower at $166.3.

Milei Misstep: The LIBRA token gained significant attention after Argentina's President Javier Milei stated that it could help small businesses.

Following his remarks, LIBRA's market capitalization surged to around $4.5 billion.

However, its value plummeted by 90 percent soon after, leading to widespread losses among investors.

Alex Thorn, head of firmwide research at Galaxy, described the situation as another troubling development in Solana's memecoin sector, which has seen a steep decline since January.

He pointed out that the TRUMP token had previously reached a fully diluted valuation of $75 billion, briefly driving excitement before the entire market saw a downturn.

Hayden Davis, CEO of Kelsier and the developer behind LIBRA, rejected claims that the token's collapse was a rug pull.

Davis told crypto investigator Coffeezilla that his team had also created the MELANIA MELANIA/USD token. They immediately acquired large portions of both tokens upon their contract deployments.

Davis argued that the LIBRA situation was not an intentional scam. “It’s just a plan gone miserably wrong with $100 million sitting in an account that I’m the custodian of,” he said.

With the fallout from LIBRA still unfolding, the impact on Solana's liquidity and investor sentiment remains uncertain.

Galaxy Research warned that traders may become more cautious about holding SOL-denominated assets.

The broader market reaction suggests that confidence in Solana's speculative tokens is diminishing, potentially affecting demand for SOL itself.

Read Next: