Solana Underperforms Amid Market Deleveraging and FTX Distribution Concerns

Solana Records Significant Decline Amid Broader Market Pressures

Solana (SOL) has experienced a marked downturn, with an 18% decline over the past week, positioning it among the worst-performing major cryptocurrencies in 2025. On September 25, 2025, SOL recorded a daily drop between 3% and 6.1%, trading in the range of $201.23 to $213.88. This performance contrasts sharply with its major counterparts; on the same day, Bitcoin (BTC) fell 1.4%, Ethereum (ETH) declined 4.2%, and XRP (XRP) backslid 5.7%.

Market Mechanics and Deleveraging Drive Sell-Off

Several factors have converged to exert significant downward pressure on Solana. The cryptocurrency's futures open interest reached a record 71.8 million SOL, valued at $14.5 billion, suggesting a highly leveraged market. Perpetual funding rates flipped positive to 0.0043%, indicating an environment where long positions were vulnerable to liquidation. Indeed, over $45 million in SOL long positions were liquidated on September 25, contributing to a broader market-wide deleveraging event that saw more than $290 million in crypto liquidations, with Solana derivatives contracts alone accounting for $31.6 million in forced selling.

Network metrics further illustrate weakening fundamentals. Data from DefiLlama shows a 16% decrease in the Total Value Locked (TVL) in Solana's DeFi protocols and an 11% drop in daily transactions over the past week. Memecoin activity, which once comprised over 60% of Solana's Decentralized Exchange (DEX) volume in late 2024 and early 2025, has fallen below 30%, and daily DEX users have retreated from a peak of 4.8 million to under 800,000.

Broader Implications and Future Outlook

Adding to the downward pressure is the impending $1.6 billion distribution from the FTX estate to creditors, scheduled for month-end. Analysts suggest that this large-scale payout, while a recovery milestone for creditors, introduces additional supply into the market, contributing to current selling sentiment. Furthermore, recent bullish corporate treasury news from Forward Industries (NASDAQ: FORD) and DeFi Development Corp (NASDAQ: DFDV) concerning Solana purchases appears to have been largely priced in, leading to a classic "buy the rumor, sell the news" reaction upon official announcements.

The pronounced underperformance of Solana against Bitcoin, Ethereum, and XRP underscores a "flight to quality" among investors, with capital seemingly rotating towards more established digital assets during periods of uncertainty. The market is also closely watching the SEC's final decisions on multiple Solana ETFs, expected by October 16. A delay or denial could further prolong negative sentiment for the altcoin. Key technical support levels for SOL currently reside around $200-$205, with analysts indicating potential pullbacks towards $155 or even $120 if these levels fail to hold amidst continued bearish pressure and elevated volatility. The confluence of deleveraging, strategic investor exits, and regulatory uncertainties will likely keep Solana under scrutiny in the near term.