Solana Sees Rising Wallet Growth Despite Security Worries and Price Drop
Solana (SOL) has seen rising daily wallet creation in February even as the token trades near $84 after a multi-month decline that erased about 67% from its September 2025 peak. Santiment flagged the divergence between falling market sentiment and on-chain activity: new addresses are increasing and exchange outflows exceed inflows, suggesting holders are moving tokens off exchanges rather than selling. Key catalysts weighing on SOL price include a January security scare that prompted validators to upgrade to Agave/Jito v3.0.14 after vulnerabilities were disclosed, and a February network disruption that rerouted U.S. traffic through Europe and Asia. Reports indicated many validators remained on older client versions during the vulnerability disclosure, raising concerns about operational resilience and consensus risk. Technicals are mixed: the token lost support around $80 and analysts warned of downside targets near $74 or $50, while some traders note potential short-term resistance toward $114. Funding rates are deeply negative, indicating heavy short positioning that can precede short squeezes. Developer activity shows signs of life — e.g., Zora moved a new product from Base to Solana charging ~1 SOL per creation — pointing to continued builder interest despite reduced hype. For traders, the story is a layered risk/reward: ongoing user and developer activity provides a base for recovery, but operational and infrastructure vulnerabilities keep short-term downside and volatility elevated.
Neutral
The net effect is neutral because the report highlights offsetting forces. Negative factors: disclosed vulnerabilities, slow validator upgrades, and a recent network routing disruption have undermined confidence and helped drive SOL lower (loss of the $80 support, analyst targets at $74/$50). These increase short-term downside risk and volatility, producing a bearish technical backdrop. Positive factors: rising new wallet creation, exchange outflows (holders withdrawing rather than selling), continued developer interest (examples like Zora moving a product), and crowded short positions with deeply negative funding rates. Those on-chain and positioning signals can support recoveries or fuel short squeezes. Historically, projects with operational incidents often see immediate negative price reactions and heightened volatility (e.g., past Solana outages in 2021–2022), but persistent developer activity and user growth have enabled recoveries over months. For traders: expect elevated short-term volatility and potential further downside if operational issues persist or more validators delay upgrades. Conversely, a quick, visible improvement in infrastructure and a catalyst (e.g., coordinated upgrades, reduced routing incidents) could trigger short-covering rallies. Positioning suggestions: use tight risk management, consider shorter time horizons for trades, watch on-chain wallet creation, validator upgrade metrics, and funding rates for squeeze signals. For longer-term holders, sustained developer traction and non-exchange accumulation are supportive but contingent on improved operational reliability.