- Solana briefly led DEX volume but saw a sharp drop as memecoin trading collapsed.
- Ethereum’s on-chain revenue fell 88% as Layer 2 growth diverted transaction fees.
- Institutional Bitcoin interest surged, with BlackRock raising allocations in key funds.
The cryptocurrency market faced significant turbulence in February 2025, witnessing a sharp downturn in prices and on-chain activity. According to report by VanEck, despite this, Solana’s decentralized exchange (DEX) volume managed to surpass Ethereum’s entire ecosystem, including Layer 1 and Layer 2 networks, albeit briefly. This remarkable shift underscores the growing influence of Solana’s blockchain, even in a month plagued by volatility, security breaches, and declining investor sentiment.
📊 REPORT: @Solana DEXs volume briefly surpassed Ethereum's entire ecosystem (L1+L2) in February despite the memecoin meltdown.
— SolanaFloor (@SolanaFloor) March 6, 2025
– Report by VanEck pic.twitter.com/bdSYBKITfM
Market Overview: A Harsh February for Crypto
Bitcoin, which had peaked at $109,000 in January, nosedived by 28%, hitting a low of $78,200 before rebounding to $84,000. Ethereum fared worse, plummeting 33%, while the broader altcoin market saw severe losses.
Smart contract platform tokens, including Solana (-37%) and Avalanche (-36%), suffered major declines. Memecoins were hit the hardest, shedding 41% of their value, as insider trading accusations and failed speculative launches led to an 80% drop in trading activity.
In traditional markets, the Nasdaq fell by 4%, marking its worst month since April 2024. The downturn coincided with a macroeconomic shock—Donald Trump’s proposed 25% tariffs on Canada, Mexico, China, and the EU. These policy moves dampened consumer confidence and rattled financial markets.
Solana’s DEX Surge and Sudden Reversal
Despite the widespread sell-off, Solana’s decentralized exchanges saw an unprecedented spike in volume, surpassing Ethereum’s ecosystem for a brief period. This surge was driven primarily by memecoin trading, which had been a dominant force in Solana’s on-chain activity. However, when the memecoin market collapsed in February, Solana’s trading volume fell sharply, alongside a 65% drop in DeFi activity.
The rapid rise and fall highlight the volatile nature of blockchain trading patterns. While Solana’s low transaction costs and high throughput make it attractive for traders, its reliance on speculative assets like memecoins exposes it to sharp reversals when sentiment shifts.
Ethereum Faces Challenges Amid Layer 2 Expansion
Ethereum struggled to maintain its dominance in on-chain trading as Layer 2 networks diverted activity away from its mainnet. Gas fees, which once served as a primary source of revenue for Ethereum, dropped 88% year-over-year. Consequently, Ethereum’s share of blockchain revenue declined from 55% to 24% over the past year.
In response, Ethereum validators increased gas limits by 20% in an effort to boost transaction capacity. However, this adjustment remains insufficient against competitors like Solana, which boasts significantly higher processing speeds. Ethereum’s upcoming “Pectra” upgrade aims to address some of these concerns by expanding Layer 2 blob capacity and improving staking mechanisms.
Security Concerns and Institutional Shifts
Security breaches continued to plague the crypto industry, with Bybit suffering a record-breaking $1.5 billion hack. This incident, reportedly linked to North Korea’s Lazarus Group, eroded trust in centralized exchanges and reinforced the need for enhanced security protocols.
Meanwhile, institutional interest in Bitcoin remained strong. BlackRock raised its Bitcoin allocation in its $150 billion model portfolios, signaling long-term confidence in digital assets. The U.S. also saw a potential policy shift, with Trump proposing a Crypto Strategic Reserve, which would include BTC, ETH, XRP, ADA, and SOL.
Regulatory Developments and Stablecoin Growth
Stablecoin regulations took a significant turn, with a new House bill reducing federal restrictions and restoring state rights. This change is expected to benefit issuers and drive stablecoin adoption. VanEck-backed Agora stablecoin surpassed $100 million in assets under management after launching on Solana, underscoring the blockchain’s growing role in the stablecoin market.
Additionally, the Czech central bank signaled interest in allocating up to 5% of its reserves to Bitcoin. Meanwhile, Abu Dhabi’s sovereign wealth fund made a $436.9 million investment in BlackRock’s Bitcoin exchange-traded product (ETP), marking a historic move by a government fund.
