Opportunity or Overvaluation: What’s Next for Solana?

September 1, 9:44 am

Solana has attracted a lot of interest in the blockchain and investment spheres because of its fast growth and changing ecosystem. Due to the hype around DeFi, NFTs and institutions, SOL’s growth recently has led many to ask: is it supported by good fundamentals, or are prices starting to rise faster than is sustainable?

Market Context and Recent Price Action

Following big gains in 2024, Solana’s outlook shifted toward pessimism. The current crypto chart indicates that SOL slipped from early-year highs near $200, now hovering around $150. This decline corresponds with broader crypto weakness: Bitcoin's repeated rejection around key resistance levels triggered capitulation across alt assets. SOL additionally suffered from softer on-chain metrics; reduced transaction velocity, lower DeFi usage, and developer slowdown.

While some token unlocks were absorbed last year, recent sell pressure resurfaces as vesting events proceed into Q2 and Q3 2025, further weighing on price. Given this context, Solana’s current drop appears to be a cyclical pullback amplified by event-driven pressure.

Bullish Case: What Fuels Upside

Even amid the current slump, several factors support Solana’s predicted growth in the coming years:

Rebound Off Flash-Crash Support

On June 5, SOL experienced a sharp 8.1% flash crash, dipping to $141.75 before rebounding to $147.40. CoinDesk described the move as the formation of an “ascending trendline”, with strong buying pressure absorbing the dip, signaling resilience and the potential for a technical short-term reversal.

On-Chain Activity Bounce

Despite broader weakness, on-chain metrics reveal pockets of underlying strength. Glassnode reported a 15% surge in SOL transaction volume, reaching $2.1 billion in the 24 hours leading up to June 4. However, increased exchange inflows (1.2 million SOL moved onslaught) highlight a tussle between demand and supply. This duality suggests that while some investors are selling, others are stepping in to accumulate the dip.

Tech-Level Setup

The price drop from approximately $153.5 to $144.6, a 5.85% decline according to CoinGecko, marks a significant corrective move. Yet, the ability to stabilize near $144 to $147 indicates that technical buyers remain active. Holding above the $140 support zone could provide a springboard for another run, especially if paired with renewed volume and momentum.

Macro Overhang Easing

Crypto markets have recently followed broader risk sentiment. SOL’s 3% decline on June 6 aligns with a 1.2% drop in Bitcoin and 5.5% in ETH, amidst investor caution ahead of the US jobs report and shifts in macro volatility. Should macro indicators show signs of stabilization or dovish pressure, SOL may benefit from a risk-asset resurgence that boosts altcoin rotations.

Bearish Case: Where Overvaluation May Lurk

Even amid rallying price action, overvaluation and near‑term risks loom:

Technical Deterioration

SOL’s fall from $153.5 to around $144.6 represents a decline of nearly 6% in 24 hours according to CoinGecko, highlighting ongoing downward pressure. This drop follows the flash-crash, signaling that buyers may be reluctant to fully commit and that bearish momentum (MACD, Chaikin) may remain intact.

Elevated Exchange Inflows

CoinGecko and Glassnode data point to significant exchange inflows (around 1.2 million SOL)” suggesting that sellers are positioning into the recent flash crash. Historically, such sell-side concentration often precedes further price weakness, as high exchange activity can provide ample liquidity for downside moves.

Weak Macro Risk Sentiment

SOL’s 3% drop coincided with broader crypto market weakness; Bitcoin fell 1.2% and Ethereum 5.5%, reflective of macro‐driven risk aversion. With key data releases like job reports on the horizon, heightened uncertainty could further dampen investor appetite for volatile assets like SOL, intensifying downside pressure. Accordingly, Kraken’s warning is prudent: unless sentiment stays strong, SOL could become range-bound or even face a 10% to 20 % correction if global economic risk appetite falters.

Kraken’s Framework for Future Outlook

To strike a balance between optimism and caution, Kraken offers a structured checklist of key indicators to monitor:

Price Action: Consolidation and Breakout Thresholds

Kraken emphasizes that SOL's price behavior around key levels will be a leading indicator for future direction. Historically, SOL has found support in the $120 to $140 band, holding above it may signal a base for recovery. A convincing weekly close above the $160–$180 range, ideally accompanied by above-average volume, would confirm a breakout, pointing toward renewed upside into early 2026. Without these signals, price may remain range-bound or drift lower.

On‑Chain Metrics: Usage, Activity and Ecosystem Pulse

The framework gives heavy weight to behavioral blockchain data. In Q1 2025, Solana led all blockchains in application-level revenue, with Chain GDP rising 20 % quarter-over-quarter from $971 million to $1.2 billion. Additionally, Solana processed an average of ~90 million non-vote transactions daily, supported by ~4 million active fee-paying addresses, a 171 % QoQ surge.

These readings strongly indicate ecosystem strength. Kraken expects that sustained increases in metrics like daily transactions, active addresses, and developer activity are essential confirmation of structural health, and they will watch Q3 and Q4 2025 for any reversals.

Macro and Crypto Sentiment: Risk Appetite and Market Context

Given crypto’s sensitivity to wider market forces, Kraken’s checklist incorporates macroeconomic triggers. For example, softening inflation or dovish Federal Reserve policy tends to release pressure on risk assets; conversely, hawkish moves can suppress them.

Additionally, Solana typically trails momentum from Bitcoin and Ethereum; strong performance in the majors boosts altcoin confidence, while weakness elevates risk of relative underperformance. This macro‑crypto interplay will be critical in assessing whether Solana can begin a sustainable rally in late 2025 or early 2026.

Institutional and Regulatory Catalysts: Futures and ETF Progress

Institutional access remains a key driver. Solana futures are now live on CME, and healthy open interest is necessary to confirm institutional commitment. Kraken looks for steady futures volumes as a sign of long-term engagement. Meanwhile, filings by asset managers like Grayscale, VanEck, Franklin Templeton, and 21Shares, moving toward spot ETF approval, play a pivotal role in legitimizing SOL . Public updates from regulators or funders, such as conditional approvals or favorable commentary, will boost confidence and liquidity.

This multivariate framework requires clustering factors. If multiple categories (technical, on-chain, macro, institutional) turn positive, the case leans toward long-term favorability and upside continuation. Conversely, divergence among categories signals caution.

Beyond price and technical trends, investors can also conduct a brand analysis of Solana’s positioning. Examine how its marketing, ecosystem engagement, and community outreach compared to competitors like Ethereum or Cardano. Insightfully mapping strengths and gaps could uncover mispricing in SOL’s current valuation relative to long-term innovation potential.

Similarly, firms seeking exposure to Solana-backed platforms should emphasize building a profitable UGC social presence. User-generated content such as tutorials, project showcases, developer stories can drive brand awareness and credibility, attracting retail and institutional engagement.

Endnote

SOL sits at a pivotal moment: its high-speed, low-cost blockchain and expanding ecosystem support structural upside, while milestones in futures and ETF markets promise institutional legitimacy. However, token unlocks, weakening momentum indicators, and macro‑driven volatility serve as meaningful short-term headwinds.

Get More Insights

Sign up and get access to a personalized dashboard, deeper insights, AI stock picks, stock alerts, weekly newsletter and much more.