Solana's SOL Surges 7% on ETF News, but Rally Faces Challenges

Solana’s native token, SOL, experienced a significant surge, rising by 7% on Monday following the announcement of the first-ever Solana exchange-traded fund (ETF) with staking capabilities, set to launch on Wednesday. This news sparked speculation among traders about the potential for institutional demand to drive SOL’s price above $200. Initially, SOL rallied to $161 but later adjusted to $157, marking a 4% gain from the previous 24 hours. The ETF, a collaboration between REX Shares and Osprey Funds, is structured as a taxable C-corporation, bypassing the typical US Securities and Exchange Commission approval process. This structure allows for a faster and smoother launch, similar to energy infrastructure partnerships, but it is less tax-efficient compared to standard cryptocurrency ETFs.

Despite the initial excitement, traders quickly realized that similar instruments could be launched for nearly every altcoin. Additionally, Grayscale’s Solana Trust (GSOL), which has been trading for over two years, manages only about $75 million in assets. In contrast, the Grayscale Ethereum Trust (ETHE) held $10 billion in assets under management one month before the actual launch of the spot Ethereum ETF in July 2024. This significant disparity suggests that institutional demand is unlikely to have a substantial impact on SOL’s price, regardless of the staking capability.

Several factors are likely to limit SOL’s price rally. Over the next two months, approximately $585 million worth of SOL will be unlocked from staking, potentially increasing selling pressure. Furthermore, some of Solana’s most successful decentralized applications (DApps) have regularly sold off their SOL holdings. For instance, the token launch platform Pump transferred over $404 million worth of SOL to exchanges in 2025 alone. This activity helps explain why SOL’s performance has largely mirrored that of competitors ETH and BNB over a 30-day period, despite the bullish ETF news.

The SOL futures funding rate, which indicates traders’ positioning, has not broken above the neutral 10% threshold despite a 12.5% gain over four days. The current price of $157 remains 47% below the all-time high of $295, and onchain data shows no recovery in network activity. Even with the hype surrounding memecoins, Solana’s network revenue has dropped by over 90% since January. Additionally, the selection of an Ethereum layer-2 network by Robinhood for tokenized stock trading and Coinbase’s partnership with Shopify on the Base network have diminished Solana’s appeal as the preferred solution for high-output DApps.

Given the increased competition and the lack of demand for currently listed Solana Trust instruments, there is little evidence to suggest that the Solana ETF launch will drive a SOL rally to $200. The ongoing SOL unlocks, DApp sell-offs, and low network activity are likely to weigh against a sustained price rally. While the ETF launch has drawn initial excitement, institutional demand remains muted, and the overall market conditions do not favor a significant price increase for SOL.