The announcement of the Solana-backed ETF has sent shockwaves through the markets. SOL token surged, surpassing key levels. Is this uptrend sustainable ? Analysis of critical levels, correction risks, and reasons for continued optimism.
Last Monday, the confirmation of the REX-Osprey SOL + Staking ETF launch propelled the price of SOL, Solana’s native cryptocurrency, to $161. This represented a 7% increase in just 24 hours. Investors quickly speculated on a potential continued rise, hoping to see SOL exceed $200.
Source: TradingView
However, this surge already seems to be losing momentum. SOL eventually ended the day at $157, representing “only” a 4% gain. In comparison, spot Bitcoin and Ethereum ETFs available in the United States didn’t generate such enthusiasm at their launch. Several factors suggest this growth might be short-lived. First, investors realized that similar instruments could be created for most altcoins, reducing Solana’s competitive advantage.
Additionally, the Grayscale Ethereum Trust, which manages $10 billion in assets, shows that institutional demand alone isn’t enough to drive prices skyward. Grayscale’s Solana Trust, meanwhile, weighs in at just $75 million.
Beyond competition, other factors are weighing on the price of SOL. Notably, massive token unlocks from staking, representing $585 million over the next two months. Some of Solana’s decentralized applications have also sold off their SOL holdings, generating additional selling pressure.
Source: TradingView
Despite this 12.5% increase over 4 days, SOL’s funding rate remains below the neutral threshold of 10%. And the current price of $157 still lags 47% behind its all-time high of $295. On-chain data shows no significant recovery in network activity.
Source: laevitas.ch
While the Solana ETF announcement initiated an upturn, Solana network’s fundamentals remain fragile. Growing competition, token unlocks, and weak institutional demand are all factors tempering short-term optimism. Investors would therefore be well-advised to remain cautious before taking positions in SOL.
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