Sonic DeFi drain accelerates – Has smart money left the station?

• Sonic’s TVL dropped by $140M, signaling liquidity exit and adding strong downside pressure to price action.
• Retail traders began selling after months of accumulation, increasing the likelihood of further price decline.

In recent days, Sonic [S] has declined by 11.25%, causing investors from the past month to record a 3.78% loss.

Currently, market activity remains bearish, with both retail and large investors, some linked to the decentralized protocol Aave [AAVE], contributing to the decline.

Behind the scenes of Sonic’s liquidity outflow

The recent drop in Sonic’s price can be traced to a significant outflow from the market in the past 24 hours. A key indicator of this is the total value locked (TVL).

According to DeFiLlama, Sonic’s TVL fell by $140 million in just 24 hours, pulling the ecosystem down toward multi-week lows.

Source: DeFiLlama

This decline coincided with a 10% drop in stablecoins deployed on Sonic—from $582.33M to $523.39M over the past week. In short, liquidity is leaving fast—and not coming back.

These withdrawals suggest both retail users and larger entities are unwinding positions and exiting exposure.

Could protocol whales be behind the drop?

Moreover, Aave’s protocol activity on Sonic hasn’t fared better. Over the last seven days, Aave’s TVL dropped by a steep 27.28%, the largest decline among major Sonic-linked protocols.

Source: DeFiLlama

Such a decline potentially implies that large holders are driving the outflows. AMBCrypto has since analyzed the behavior of large holders in the market.

According to the Large Holder Netflow—which tracks the inflow and outflow activity by major players—2 million FTM was sold.

Source: IntoTheBlock

At the current price, this group sold $950,000 worth of tokens in the past 24 hours alone. If this trend continues, Sonic is likely to slide further.

Spot traders join the action

Spot traders, typically retail investors, are also contributing to the ongoing trend.

For the first time since March, this group recorded a weekly sell-off of Sonic. CoinGlass data shows investors sold over $300,000 worth of the asset.

Source: CoinGlass

When such a shift occurs after weeks of accumulation, it signals a highly negative market sentiment surrounding the asset’s next move.

For now, most market indicators point toward the likelihood of a further decline in Sonic’s value.