What Caused the Crypto Crash: Solana and XRP Prices Plummet

Market turbulence is impacting Solana and XRP as scandals and regulatory uncertainties create doubt among investors.

Solana’s Journey: Political Scandals and Memecoin Madness

Solana (SOL) has faced a challenging start to 2025, with a sharp decline of over 40% in just one month. The main reasons behind this drop? A combination of political scandal, market sell-offs, and the ongoing volatility of memecoins.

The turmoil began when Argentine President Javier Milei publicly supported LIBRA, a memecoin based on Solana that quickly became a cautionary tale in the crypto sphere. Initially seen as a strong endorsement from a global leader, the situation turned sour as LIBRA’s market cap plummeted to $4.5 billion, losing 90% of its value. The project turned out to be a classic pump-and-dump scheme, leaving many retail investors empty-handed.

This dramatic downfall triggered a cascade of sell-offs across the Solana network. Although Solana had been performing well in late 2024, the memecoin debacle shattered investor trust. To add to the chaos, Milei is now facing legal challenges, with several lawsuits filed by Argentine legal professionals alleging financial impropriety related to the LIBRA scandal.

Despite the upheaval, some analysts remain positive, asserting that Solana’s fundamentals are still solid. VanEck, Bitwise, and Pantera Capital have all suggested that SOL could bounce back, with VanEck even speculating it could reach $520 by the end of 2025 if the current turbulence subsides and institutional interest remains strong.

XRP’s Decline: Regulatory Uncertainty and Political Disappointments

If Solana’s downfall was fueled by scandal, XRP’s struggles stem from regulatory ambiguity and political letdowns.

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XRP, which had a promising beginning in 2024, has dropped 3.6% to $2.59, marking a 19% decline over the past month. Much of this decline is attributed to concerns related to the SEC and diminishing optimism regarding crypto-friendly policies from the new Trump administration.

One of the key hopes for XRP was the approval of an XRP Exchange-Traded Fund (ETF), which would enable institutional investors to access XRP without directly purchasing the token. While analysts believe approval could lead to significant inflows, the SEC has yet to make a clear decision.

Adding to XRP’s challenges is the unpredictable approach of the Trump administration towards crypto regulation. While candidate Trump hinted at potential pro-crypto policies, his administration’s actions thus far have been underwhelming. In fact, Trump’s recent tariffs on Canada, Mexico, and China have sparked broader market concerns, fostering a general risk-off sentiment in the crypto sphere.

The ETF Hype: Hope on the Horizon?

Despite the bearish mood, some crypto enthusiasts argue that both XRP and Solana have an opportunity to recover, thanks to potential ETF approvals.

In the case of XRP, the SEC is reviewing multiple ETF applications from Grayscale, Bitwise, and others, and if approved, institutional investors could inject substantial sums. Increased liquidity could significantly reverse the current downward trend.

Solana also holds ETF potential, with investors expressing interest in launching a regulated Solana fund. An approved ETF could restore confidence in the ecosystem and drive Solana’s value higher. However, given recent controversies, regulators may be hesitant to approve anything related to Solana in the near future.

Proceed with Care

While some long-term investors remain hopeful, the short-term outlook for Solana and XRP remains volatile.

Solana’s price may continue to feel the repercussions of the LIBRA scandal, especially if the lawsuits against Milei gain traction. If more memecoins on Solana collapse, investors may start questioning the network’s ability to support sustainable, legitimate projects.

On the other hand, XRP is still entangled in regulatory uncertainties. The SEC’s stance on crypto remains unpredictable, and until XRP receives clear regulatory approval—particularly in the form of an ETF—its price may stagnate.

For now, crypto investors should brace for additional turbulence. Between political scandals, regulatory obstacles, and global market concerns, the upcoming months could be pivotal for Solana and XRP.

One thing is certain: crypto never ceases to be interesting.

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