Solana lost $3 billion from its market cap when SOL’s price sank.

Solana (SOL) has hit a bearish run over the past week, shaving nearly 5% off the market and billions of dollars since yesterday.

The coin traded at $170 as of June 6, the highest gain in the past 12 months. But Solana's price fell to $123.42 on Monday.

SOL has fallen by at least 11% over the past week, coinciding with a general decline in the value of crypto assets amid negative investor sentiment in the cryptocurrency market.

Widespread market failure

Solana's downward slide could be due to a combination of market-wide factors and specific challenges facing the cryptocurrency. In addition, Solana – traditionally known for high transaction fees and low transaction fees – faces network congestion and competition from other blockchain platforms.

Solana has shown a possible comeback in the past, but the recent trading of MemCoin has pulled it in both directions, said Andrew Kang, co-founder of Mechanism Capital.

More and more celebrities have lent their branding names to new meme coins flooding the market. At least 500,000 Mem coins were released in May alone.

Kang predicted that Solana could drop to $80 if “mem trading pauses for the next few months.”

For Solana, the end of meme coin mania may have first come after right-wing internet personality Andrew Tate threatened to “destroy Solana's network.”

Tate says Solana-based meme coin TOP G has burned through more than $38 million, effectively liquidating 58% of its supply and driving its price up more than 130%. Despite the massive fire that left Top G's market value at more than $65 million, Tate said he made no profit from the action.

But the latest SOL debacle is not happening in isolation.

Other cryptocurrencies such as Ethereum (ETH), Cardano's ADA and BNB Chain's BNB recorded similar losses, while Bitcoin fell to $61,000. Meanwhile, meme coins Dogecoin (DOGE) and Shiba Inu (SHIB) saw a 5% drop.

In addition, the broader financial markets were also under pressure as major indexes such as the S&P 500 declined.

The movement of Mem Coin has led to an increase in trading, especially on Solana. According to information from Daffy Lama, Solana's business volume has increased recently, largely due to interest from explosive coins like TOP G, Tate's DADDY and Australian rapper Iggy Azalea's mother.

Still, negative exchange-traded fund (ETF) earnings and weak macro data from previous weeks contributed to the decline, Kang said.

Legal risks of celebrities promoting meme coins

The rise of meme coin activity has raised legal concerns, especially with celebrities promoting these tokens.

While meme coins can bring a lot of attention and financial gain, they also come with major legal pitfalls. Celebrities can face significant civil and criminal liability if their actions are found to constitute market manipulation or if they make false or misleading claims about the tokens they endorse.

Edited by Stacy Elliott.

Editor's note: This post has been updated since publication to remove mistranslated references to the joke.