Is Solana’s $10B liquidity drain a sign of trouble for SOL?

• Solana has burned over $10 billion in value in just six months, more than its entire TVL.
• Is SOL climbing on solid ground, or just flying on fumes?
  

May brought plenty of chop to the crypto market, but Solana [SOL] had it worse than most, dropping about 10% and underperforming the rest of the high-caps. 

That said, with the market starting to stabilize, SOL has already bounced back 5% at press time. It looks like strategic investors are beginning to reposition, eyeing the next major resistance as the potential breakout zone.

But under the surface, liquidity dynamics are shifting, and not necessarily in Solana’s favor. According to AMBCrypto, unless that trend reverses, this rally might not have the legs to last.

Riding high on thin liquidity, but for how long?

Liquidity is the lifeblood of Solana.

It fuels user activity and acts as sidelined capital ready to deploy. Most Layer 1s tighten supply the old-school way: By burning tokens, sending them to dead addresses to fight inflation.

But Solana’s $10 billion “burn” over the past six months is anything but traditional. This isn’t just about reducing supply. Instead, it’s about value being siphoned out of the system.

Take Pump.fun, for instance. It has pulled over $700 million SOL into memecoin launches. While these short-lived tokens attract liquidity fast, much of that value vanishes just as quickly, never recycling back into core DeFi. 

Meanwhile, a significant portion of this loss comes from MEV (Maximal Extractable Value) strategies. In fact, it’s estimated that up to 30% of Solana’s daily TVL gets drained this way during peak periods.

Source: DeFilLama

But the most concerning part? The $10 billion burned exceeds Solana’s current Total Value Locked (TVL) of $8.822 billion. 

That means the network is operating at a net liquidity loss, where more value is leaving the ecosystem than staying in it. Yet, Solana’s price continues to climb, making this divergence worth watching closely.

Short-term gains, long-term questions for Solana

As flagged by AMBCrypto, HODLer conviction in Solana is running low. When paired with the ongoing liquidity bleed, it signals a market structure that’s becoming increasingly fragile.

Price might still be climbing, but without strong hands holding the line and enough capital sticking around, SOL could be riding more on “hype” than real support, making it way more vulnerable if sentiment turns.

In fact, we’ve already seen signs of that play out over the past two weeks. SOL didn’t just lose one key support, it broke through two, sliding back to $140 as market FUD resurfaced.

Source: TradingView (SOL/USDT)

Sure, a push toward the $164 resistance remains on the table, especially with opportunistic capital rotating in on the “dip”.

But zooming out, the broader structure looks less convincing. With more Solana being extracted than being restaked or locked into DeFi, the network is effectively running a liquidity deficit. 

And in crypto, we’ve seen what happens when the hype wears off and there’s no real support underneath.