Highlights:
- Solana is making some gains intra-day
- Sustained bullish momentum could put Solana on course to test $218
- Such price action could play out if the broader market turns bullish
Like Bitcoin (BTC) and other altcoins, Solana (SOL) has experienced quite a decline in the past few weeks. Solana is trading at $197.18, a 2.05% decline over the last 24 hours. This decline is part of a 35% pullback since its January peak of $295. Most experts are conflicted on whether Solana will stage a comeback or continue to decline for the time being.
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Broader Market Correction Pushing Solana Lower
Solana’s pullback is mainly linked to the ongoing Bitcoin price correction. Bitcoin is down from its yearly high of $109,200 to just under $99,000, and the whole market is feeling it.
Solana-based meme coins have been hardest hit, impacting Solana’s price action. According to CoinGecko, the market cap of Solana meme coins has dropped significantly, from $25 billion in January to $12 billion. Famous coins like Fartcoin, Pudgy Penguins, Bonk, DogWifHat, and others have tanked in value over the past 30 days, showing an apparent dip in market sentiment. The ongoing downturn in the meme coin could cause Solana to test even lower prices.
Solana On-Chain Activity in Decline – A Bearish Signal
Further pushing Solana lower is the decline in Solana DEX activity. Solana’s decentralized exchange trading volume continues to decline, decreasing by 25% over the last week to stand at $41.6 billion. Raydium, Meteora, and Lifinity are losing over 30% of their weekly trading volumes. Also, the sales of non-fungible tokens (NFTs) on the Solana blockchain are suffering, as they have decreased by 36% in the last month.
Solana’s active addresses are also experiencing a sharp decline. The number of active wallet addresses on the Solana blockchain network has decreased significantly. In January, there were 6.5 million active wallets. The number now stands at 3.8 million. This decline suggests users are less engaged and the network is less active, which increases concerns about Solana’s future in the short term.
Analysts Expect a Solana Price Rebound Soon
Even with the ongoing bearish sentiment, some analysts believe Solana can reverse. Crypto expert Ali, for example, believes that there is a parallel channel pattern for Solana that would either take it to $350 or drop it to $150, depending on the market. If SOL continues to get support, it could move towards upper resistance and higher prices.
Additionally, VanEck, one of the top investment management firms, is still bullish about Solana’s future. The firm estimates that Solana’s market cap will increase significantly by the end of 2025, which could stretch the price to $520. This optimistic projection is based on Solana’s expanding functionality in the smart contract platform (SCP) and growing institutional interest.
Our Solana Price Target by the End of 2025 is $520
We value Solana (SOL) based on its projected year-end market share within the smart contract platform (SCP) market. Our SCP market cap forecast is derived from U.S. M2 money supply growth, given its strong historical correlation…
— VanEck (@vaneck_us) February 6, 2025
Institutional Money Taking a Keener Interest in Solana
Even more bullish for Solana is that institutional investors are increasingly focusing on it. Most importantly, Solana’s stablecoin ecosystem is expanding rapidly as Circle recently minted another 250 million USDC on the blockchain. This brings the total amount of newly minted USDC’s on Solana this year to $6 billion. It solidifies Solana’s position in DeFi and stablecoin’s economic activities.
Circle minted another 250M $USDC on Solana 3 hours ago!
So far in 2025, #Circle has minted 6B $USDC on #Solana, including 1.25B $USDC in the past week.
Despite the uncertainties from Trump's tariffs, most altcoins remain strong, and the minting of new stablecoins suggests a big… https://t.co/VwMdV2jt7k pic.twitter.com/sOh7M8DPHs
— Spot On Chain (@spotonchain) February 1, 2025
Additionally, the appetite for Solana financial services is growing exponentially. Brazil is set to launch the first spot Solana ETF in 2024, while some of the largest investment companies, such as VanEck, 21Shares, and Grayscale Investments, are lobbying for a spot Solana ETF in the US. With a pro-crypto administration now in office in the US, this could trigger a strong rally for Solana.
Technical Analysis – Solana Price Rebounds But Bulls Still Weak
Solana has been in a correction since February 4. However, bulls appear to be regaining control intra-day.
However, for bulls to sustain momentum, the broader market needs to make a strong rebound. If this happens, Solana could target the $218.61 resistance in the short term. On the other hand, if the broader market sentiment remains negative, Solana could drop back to the multi-week support at $184.49.
Recap
While Solana continues to show weakness, some experts believe the anticipated change in support and resistance levels may have a broader impact. An extended breach above $220 may result in SOL moving toward $260 to $280.
Some experts assert that movement below $170 would bring swifter declines toward the $120 region. In the long term, Solana is expected to benefit from the expanding DeFi ecosystem, rising adoption of stablecoins, and growing interest from institutional players.
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