The price of Solana (SOL) experienced a significant sell-off over the past week, declining roughly 8% to trade around $122. This sharp drop was triggered by a combination of a major class-action lawsuit targeting the Solana ecosystem and renewed macroeconomic jitters in global markets.
The immediate catalyst was a legal threat. A new amended complaint was filed in federal court alleging Racketeer Influenced and Corrupt Organizations Act (RICO) claims against Baton Corp (doing business as Pump.fun), the Solana Foundation, Solana Labs, and certain officers. The lawsuit alleges that the prominent Solana-based memecoin launchpad, Pump.fun, operated a marketplace that was "structurally tilted to extract value from ordinary users" by giving insiders with privileged access to Solana's infrastructure and Jito Lab's transaction ordering tools priority to buy tokens at the lowest prices before the public.
This legal uncertainty coincided with a broader risk-off sentiment in financial markets, driven by growing political tensions over US trade policy and concerns in Europe, which pushed stocks lower. Cryptocurrencies, including Solana, followed suit. Analysts note that altcoins like SOL tend to drop rapidly when fear simultaneously hits stocks, bonds, and crypto, with the current macroeconomic issues suggesting the bottom may not yet be in for the volatile sector.
The price action has been severe for assets directly implicated. SOL is testing the critical $120 support level, with fears that a break below could send it toward $100. Meanwhile, Pump.fun's native token, PUMP, has also reversed its early 2026 gains, falling from a high of $0.003 on January 17 to trade around $0.0025 with no sign of a bounce.
Interestingly, positive developments have been ignored in the fearful climate. News that traditional finance players plan to trade tokenized stocks like Nvidia and Microsoft on Solana via Ondo Finance—a long-term growth signal for the network—failed to generate any positive price reaction, highlighting the market's current focus on risks.
Despite the price turmoil, on-chain data tells a different story about network health. Santiment data shows Solana's active addresses have nearly doubled from 2.5 million to 4.8 million since the start of 2026, indicating a return of user participation not solely driven by speculation. Furthermore, derivatives market data reveals SOL's total Open Interest surged by over $34 million in a 24-hour period, pointing to increased institutional positioning and stronger market conviction.
However, a significant macro headwind remains. Prediction market Polymarket indicates an 81% chance of another US government shutdown by January 31, an event that could unsettle risk assets, including crypto. The combination of lawsuit fears and macro uncertainty has created a cautious environment for SOL and PUMP, reminding investors that Solana's high-speed network also comes with fast-moving risks.
