NOIDA (CoinChapter.com) — The memecoin sector experienced a significant crash on February 25, with major tokens including Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE) all suffering double-digit losses. At the time of writing, DOGE was down 20%, SHIB dropped 14%, and PEPE had plunged over 20% since February 24. This downturn was triggered by panic selling, which was driven by the collapse of the LIBRA token, a decrease in liquidity, and overall market instability.
The main catalyst for this crash was the implosion of the Libra token, a project based on the Solana blockchain and associated with Argentine President Javier Milei. The token experienced a crash of over 90% in just a few days after insiders sold off $87-110 million worth of tokens, leading to widespread distrust in memecoins. Additionally, large investors drained liquidity pools, leaving speculative tokens vulnerable to significant price drops. Meanwhile, Bitcoin (BTC) consolidating below $96,500 and rising U.S. Treasury yields are diverting capital away from riskier assets.
DOGE has fallen by nearly 5%, currently trading at $0.20005, down from its 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, further reinforcing the sell-off.
Political memecoins are also being heavily affected. TRUMP has plunged to $12.687, down almost 90% from its peak in December when it was valued at over $60. However, the biggest loser remains LIBRA, which is now valued at $0.1226, down over 16% in a single day and nearly 90% from its peak in February 2025.
This collective drop highlights the liquidity crisis that is impacting the memecoin sector. With large investors exiting liquidity pools and the aftermath of the Libra token collapse, memecoins are left with little support. Unless sentiment changes, memecoins may continue to experience further losses in the coming days.
The liquidity exodus and the collapse of the Libra token are major factors contributing to the current downturn in the memecoin market. Memecoins typically operate with low liquidity, making them susceptible to rapid price fluctuations. Recently, significant whale wallets have been withdrawing liquidity, converting their holdings into stablecoins and Solana (SOL), and flooding the market with excess tokens.
This sudden increase in token supply has led to sharp declines in prices, particularly for tokens with inflated market caps and limited liquidity buffers.
The collapse of the Libra token has intensified market panic. Launched on February 14 on the Solana blockchain and endorsed by Argentine President Javier Milei, Libra’s market capitalization reached $4.5 billion following Milei’s promotion.
However, the token’s value plummeted by over 90% within days after insiders, who controlled 82% of the token supply, withdrew around $99 million from the liquidity pool.
This 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 had a pronounced impact on Solana-based memecoins, with tokens like Bonk (BONK) and Dogwifhat (WIF) experiencing significant losses.
Additionally, the market is facing 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, a prominent platform for memecoins, is also facing its own challenges, contributing to the broader market downturn. The network has lost 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 the value of SOL 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. The ongoing consolidation phase of Bitcoin’s price 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 significantly, particularly on platforms like X. Memes that once drove significant price increases are now failing to gain traction, and large investors are choosing to liquidate their 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.