The Solana cryptocurrency sank to the lowest level since early November as the president of Argentina became embroiled in a scandal involving a memecoin launched on the token\u2019s blockchain.<\/p>\n
Solana, the sixth-largest crypto token, has lost about 25 percent\u00a0of its market value since February 14 as Argentina President Javier Milei came under scrutiny for promoting a token called Libra on the Solana blockchain, a network that has become popular for developers of crypto memecoins due to its low fees and fast transaction fees. \u00a0 \u00a0\u00a0<\/p>\n
The roughly US$20-billion slide has drawn attention to the sudden surges and crashes in memecoins as promoters have been issuing thousands of the tokens, which generally have no underlying value. Nearly\u00a060,000 tokens<\/a>\u00a0have been launched through Pump.fun, which lets anyone issue a token on Solana, according to tracker Dune.<\/p>\n \u201cThe market is concerned about liability contagion,\u201d said Henry Elder of UTXO Management. \u201cEvery hour it seems that another leader in the Solana ecosystem is implicated in Libra and other extractive token launches that have featured almost exclusively in that ecosystem for several months.\u201d<\/p>\n Another high-profile meme token issued on Solana by US President Donald Trump has lost nearly 80 percent of its value since its Jan. 19 peak, according to tracker CoinMarketCap. A memecoin tied to First Lady Melania Trump is down 70 percent. Libra, which has caused\u00a0political turmoil<\/a>\u00a0in Argentina, is down nearly 90 percent\u00a0since it came out last week, CoinMarketCap data show.<\/p>\n Other cryptocurrencies were hit hard on Tuesday. Bitcoin slumped below US$94,000 for the first time in two weeks. Ether was down more than five percent, while altcoins such as Cardano and Chainlink were off around 9%.\u00a0<\/p>\n Memecoins, which aren\u2019t usually tied to any product or service, are viewed as a cultural phenomenon in crypto. Long-time versions such as Dogecoin, which features a picture of a dog, started as a joke but has garnered a following including billionaire Elon Musk, and now has a US$36-billion market value. In recent years, other memecoins have been trying to engage loyal followers as well, with the likes of Shiba Inu and Pepe making their debuts. But many memecoins\u2019 buyers have become victims of pump-and-dump schemes and rug pulls, in which the coins\u2019 creators run up their prices and then exit, leaving others holding the bag as the price crashes.<\/p>\n There could be other reasons for Solana\u2019s price decline as well, such as potential large sales of the token by Solana investors, with about US$1.8-billion worth of the token hitting the market on March 1 due to unlocks, Elder said. Some coins granted to or purchased by certain parties can\u2019t be sold until they unlock on a certain day.<\/p>\n \u201cMany investors are front-running expected sales from those that are unlocking,\u201d said Jeff Dorman, chief investment officer at Arca. \u201cFurther, the negative sentiment created from Pump.fun\u201d and other parties involved \u201cin the TRUMP, MELANIA, and LIBRA tokens have weighed on price.\u201d<\/p>\n by Olga Kharif, Bloomberg<\/p>\n \t\t\t\t\t\t\t\t<\/p>\n