NOIDA (CoinChapter.com) — The memecoin sector crashed on Feb. 25, with major tokens like Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE) suffering double-digit losses. At writing, DOGE was down 20%, SHIB dropped 14%, and PEPE had plunged over 20% since Feb. 24. The downturn follows a wave of panic selling, driven by the collapse of the LIBRA toke, thinning liquidity, and broader market instability.
The biggest catalyst is the implosion of the Libra token, a Solana-based project linked to Argentine President Javier Milei. The token crashed over 90% in days after insiders offloaded $87-110 million, triggering widespread distrust in memecoins. Meanwhile, whales drained liquidity pools, leaving speculative tokens vulnerable to free falls. At the same time, Bitcoin (BTC) consolidating below $96,500 and rising U.S. Treasury yields are pulling capital away from riskier assets.
DOGE, SHIB, PEPE, TRUMP, and LIBRA extend losses. Source: TradingviewDOGE has fallen nearly 5%, now trading at $0.20005, down from an intraday high of $0.21390. SHIB is down 1.87%, slipping to $0.000013386, continuing its downward trend. PEPE has lost over 4.4%, trading at $0.0000075409, reinforcing the sell-off.
Political memecoins are also suffering. TRUMP has plunged to $12.687, down nearly 90% from its December peak of over $60. The biggest loser remains LIBRA, now at $0.1226, down over 16% on the day and nearly 90% from its Feb. 2025 high.
The collective drop underscores the liquidity crisis hitting the memecoin sector. Whales exiting liquidity pools, combined with the aftermath of the Libra token collapse, have triggered a mass sell-off, leaving tokens with little support. Unless sentiment shifts, memecoins could see further pain in the coming days.
Liquidity Exodus and the Libra Token Collapse
The current memecoin downturn is significantly influenced by a liquidity exodus, exacerbated by the collapse of the Libra token. Memecoins typically operate on thin liquidity, making them susceptible to rapid price fluctuations. Recently, major whale wallets have been withdrawing liquidity, converting holdings into stablecoins and Solana (SOL) while flooding the market with excess tokens.
Liquidity drain accelerates memecoin crash as whales exit rapidly.The sudden increase in supply has led to sharp price declines, particularly for tokens with inflated market caps and limited liquidity buffers.
The Libra token incident has intensified market panic. Launched on Feb. 14 on the Solana blockchain and endorsed by Argentine President Javier Milei, Libra’s market capitalization surged to $4.5 billion following Milei’s promotion.
Liquidity exit exposed flaws in Milei-backed tokenHowever, the token’s value plummeted by over 90% within days after insiders, controlling 82% of the supply, withdrew approximately $99 million from the liquidity pool.
The withdrawal caused the token’s price to collapse to $0.50 by February 15. Milei’s subsequent deletion of his promotional post and denial of involvement further eroded investor confidence. This event has pronounced impacted Solana-based memecoins, with tokens like Bonk (BONK) and Dogwifhat (WIF) experiencing significant losses.
Additionally, the market faces oversaturation, with hundreds of new tokens launching daily, diluting liquidity and leading to widespread sell-offs, which could be another reason for the recent memecoin market crash.
Solana Also Responsible For Memecoin Market Crash
Solana, a prominent platform for memecoins, is facing its own challenges, contributing to the broader market downturn. The network has seen a loss of approximately $50 billion in market value over the past month, with its native token, SOL, declining by 15-16% since mid-February. This decline is partly attributed to the fallout from the Libra token collapse and the proliferation of speculative memecoins, which have saturated the market and strained the network’s reputation.
As SOL’s value decreases, memecoins built on the Solana platform are experiencing disproportionate losses, leading traders to withdraw funds from Solana-based projects and exacerbating the liquidity crisis.
The broader cryptocurrency market is also experiencing instability. Bitcoin price’s ongoing consolidation phase has dampened enthusiasm for altcoins. The failure of other high-profile tokens, such as Melania Trump’s token, which has declined by 72% from its peak, has further undermined speculative confidence.
Social media sentiment has shifted markedly, particularly on platforms like X. Memes that once drove significant price increases are failing to gain traction, and large investors are opting to liquidate positions rather than engage in new speculative ventures. Without a strong bullish catalyst, the current sell-off may continue, leading to further declines in the memecoin market.
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