Solana (SOL) Rallies 13% Ahead of Ether ETF Launch, Can It Reclaim $180?

Solana's native token SOL rallied 13% between July 14 and July 16, breaking above the $160 resistance level for the first time in five weeks.

Solana's ( SOL ) native token price experienced a 13% surge over the two days from July 14 to 16, finally breaking above the $160 resistance level for the first time in five weeks. However, bulls may have little to celebrate as SOL still trades at a loss of nearly 24% from March's peak of $209. As a result, traders now question the sustainability of the uptrend and the odds of retesting the $180 level in the near term.

Solana memecoin frenzy and Ether ETF momentumThe recent excitement around SOL can be partially linked to the final stages of approval for Ether ( ETH ) exchange-traded funds (ETFs). According to Bloomberg analyst Eric Balchunas, the U.S. Securities and Exchange Commission delivered final instructions to asset managers as it prepares to launch on July 23.

Meanwhile, VanEck and 21Shares filed for a Solana ETF application on July 8, though a final decision from the SEC is expected by March 2025.

Solana is also known for its memecoins, thanks to the network's low fees for launching and trading, which has led to the success of memecoins like BONK and DogwifHat (WIF), with peak market capitalizations of $2.8 billion and $4.8 billion, respectively. More importantly, Solana has been able to build an active and engaged community, which is not easily replicable.

Several Solana SPL memecoins have shown impressive gains over the past 7 days, such as MICHI (up 71%), POPCAT (up 70%), MYRO (up 36%) and TRUMP (up 30%). These movements help bring in new investors and, subsequently, increase the demand for SOL tokens due to increased decentralized applications activity and liquidity in the Solana ecosystem, including its total value locked (TVL).

Solana is currently the second-largest blockchain in terms of decentralized exchanges volumes, closing in on market leader Ethereum.

Despite Ethereum's average transaction fee of $2.3 posing unfair competition, Solana DEX activity remained strong even when compared to Arbitrum and BNB Chain, which also benefit from extremely low costs. It is also interesting to note that Base, an Ethereum second layer which also became known for memecoin and token launches, saw its volumes fizzle out. After peaking at a 10.8% weekly market share on June 8, Base is now down to 3.6%, according to DefiLlama data.

Solana TVL growth and SOL futures markets activitySolana's activity growth is also reflected in its total value locked, surpassing BNB Chain. A higher deposit base is usually considered bullish as it increases network security and contributes to a positive feedback loop, attracting more users and developers and driving up token valuation and potential for growth.

Highlights on the Solana network include Jito, a liquid staking solution, whose TVL increased 14% in 30 days, and Kamino, a lending and leverage solution, which saw a 12% growth in deposits in the same period. Finally, Jupiter Perpetual, a DEX aggregator, experienced a 28% growth in TVL over the past 30 days. In comparison, leading BNB Chain DApps PancakeSwap and Venus faced a 7% and 5% TVL decline in the same period, respectively.

Institutions are more bullish on Ether than retail ahead of ETH ETF launchFinally, one should analyze SOL's futures markets. The SOL futures premium reflects the difference between the monthly contracts’ derivatives prices and the spot level on regular exchanges. Typically, a 5% to 10% annualized premium (basis) occurs to compensate for the extended settlement. In essence, a higher premium suggests that traders are willing to pay more for future contracts, indicating bullish sentiment.

The SOL futures premium is currently at 12%, which has been the average rate for the past couple of days, indicating a cautiously optimistic sentiment among traders, especially considering that SOL gained 25.7% over the past eleven days. Given Solana's vibrant network activity and derivatives metrics, SOL has what it takes to continue its gains toward $180.

This article is for informational purposes only and not intended as investment or financial advice.

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