$USDC $SOL #PowellRemarks #CryptoStocks
The rise in SOL's price to $200 is on the horizon, but there are three key catalysts that must happen first.
SOL's price has declined amid stagnant DApp growth and fading hype around memecoin, but distinguished RWAs and ETF approval could turn the tide.
The rise in SOL's price to $200 is on the horizon, but there are three key catalysts that must happen first.
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Key points:
Solana DApp activity has stalled due to waning interest in memecoins.
TradFi and distinguished RWA assets may reignite SOL's long-term growth potential.
SOL
SOL
$145.31
Bitcoin, the native digital currency of Solana, faced strong rejection at the $158 level on Monday. The subsequent drop to $143 by Wednesday represented a 14% loss over seven days. Traders are now concerned about dwindling chances of reclaiming the $200 level, with rising demand for leveraged Bitcoin positions amid recent price weakness.
Total open positions in SOL futures contracts (SOL). Source: CoinGlass
As of Wednesday, the total open positions in SOL futures contracts reached 45.7 million SOL, an increase of 19% from the previous month. While every buyer (long) is met with a short position (seller), the leverage intensity may vary for each party. The value of these current open positions is estimated at $6.7 billion, making it crucial to assess which party was more daring.
Do the chances of approving a SOL ETF fund lead to price benefits?
Funding rates in perpetual futures are a key metric for understanding market trends. Under neutral conditions, the annual funding rate should range between 5% and 15%, indicating that long buying positions are paying a premium to keep trades open. As markets trend downward, this rate tends to fall below this range.
Annual funding rate for SOL perpetual futures. Source: Laevitas.ch
On Wednesday, SOL's funding rate dropped to 0%, indicating increasing demand for short positions. More importantly, this indicator has failed to stay above the 15% annual threshold over the past three months, reflecting a broader lack of confidence among optimists. Even the spike to $185 in mid-May did not renew interest in long leveraged buying positions.
While long leveraged buying is not a prerequisite for SOL to reclaim the $200 level, a significant change in investor sentiment is crucial. In the absence of renewed confidence, the market may continue to face selling pressure. SOL's performance remains closely tied to network activity on the Solana platform, which has seen stagnation over the past three months after reaching an all-time high in January.
Solana's TVL (left) versus weekly revenues from decentralized applications (right). Source: DefiLlama
The total value locked (TVL) on the Solana network has stabilized at around $10 billion, while weekly revenues from decentralized applications (DApps) have dropped to below $40 million. In comparison, these decentralized applications generated over $100 million weekly between mid-November and mid-February.
The recent decline in SOL also reflects the exaggerated excitement fueled by memecoin activity, especially after Trump's official launch.
Trump
$9.38
The token on Solana surprised traders, as previous efforts by companies allied with President Donald Trump largely favored Ethereum.
Related: Increased demand for altcoin ETFs as the SEC softens its stance on cryptocurrencies.
Potential approval from the SEC for a SOL ETF is seen as the most important short-term catalyst for the token. However, analysts believe that SOL will benefit more from the long-term growth of tokenized securities on the Solana blockchain, according to a stock research report by Cantor Fitzgerald.
Analysts reportedly affirm that Solana is "much better than Ethereum on all metrics," expecting an increasing number of companies to adopt Solana as a treasury asset. They point to strong developer growth and higher operational efficiency compared to the more complex Ethereum layer two ecosystem.
While a price target of $200 may seem out of reach based on derivatives data, increasing institutional interest and blockchain technology adoption could quickly reflect the current market sentiment.
