Solana's On-Chain Fundamentals and Undervaluation Signals: A Case for Rebound in Q4 2025

Solana (SOL) has long been a cornerstone of the high-performance blockchain ecosystem, but its recent price action has sparked debates about undervaluation. As of Q4 2025, the network's on-chain supply dynamics, coupled with ecosystem upgrades and institutional adoption, present a compelling case for a potential price rebound. This analysis synthesizes on-chain data, technical indicators, and macroeconomic signals to evaluate Solana's investment thesis.

On-Chain Supply Dynamics: A Disinflationary Edge

Solana's tokenomics are structured to create long-term scarcity. As of Q4 2025, the circulating supply stands at approximately 445 million SOL, with over 60% staked, effectively reducing liquidity on exchanges while still being counted in the circulating supply according to data. The total supply exceeds 500 million tokens, but 9% remains non-circulating, locked in stake accounts or held by entities like Solana Labs as reported. This staking mechanism not only secures the network but also limits the immediate availability of tokens for speculative trading, a structural advantage for price stability.

The network's disinflationary model further strengthens its fundamentals. Annual inflation, which started at 8%, decreases by 15% annually, targeting a 1.5% floor. Additionally, 50% of transaction fees are burned, permanently removing SOL from circulation. While specific Q4 2025 burn rate data is sparse, the ongoing fee-burning mechanism ensures a tailwind for token scarcity. For context, the average transaction fee of $0.00025 according to statistics-among the lowest in the industry-suggests that the burn rate, though modest in absolute terms, is sustainable and consistent with Solana's microtransaction use cases.

Undervaluation Signals: Fundamentals vs. Technicals

Despite robust on-chain metrics, Solana's price has faced bearish pressure. As of late October 2025, SOL traded at ~$141.77, far below the $1,000 estimate proposed by developer Mert Muntaz. Technical analysis corroborates this divergence: the price sits below the 20, 50, and 200-day EMAs, with an RSI of 31 and a negative MACD, signaling oversold conditions. Key support levels at $161.58 and $154.73 USDT are critical to monitor, as a breakdown could trigger further consolidation according to analysis.

However, the bearish narrative is counterbalanced by institutional activity. Despite a 30% Q4 price drop, institutions have increased SOL holdings, hinting at long-term confidence. This aligns with broader macroeconomic trends, including Bitcoin's projected rise to $130,000 by Q4 2025, which could drive risk-on sentiment in the crypto market.

Price Rebound Catalysts: Ecosystem Upgrades and Adoption

Solana's roadmap for Q4 2025 includes transformative upgrades that could catalyze a price rebound. The Firedancer validator client, developed by Jump Crypto, is designed to scale the network to 1 million transactions per second, while Alpenglow aims to finalize blocks in under 150 milliseconds as reported. These upgrades, coupled with a 25% increase in compute units per block and doubled block space, position Solana to handle mainstream financial operations according to analysis.

Adoption milestones further bolster the case. The DeFi Total Value Locked (TVL) reached $11.5 billion in Q3 2025, with Kamino leading at $2.8 billion according to the report. Meanwhile, institutional adoption is accelerating: Fidelity Digital Assets expanded Solana access, and a Hong Kong spot ETF is expected to launch in mid-October 2025 as noted. Analysts project SOL could reach $190–$200 by late November 2025 as these upgrades materialize according to forecasts.

Risks and Considerations

While the fundamentals are strong, technical indicators remain bearish. A breakdown below $154.73 USDT could extend the downtrend, and macroeconomic volatility-such as interest rate uncertainty-poses a risk to risk-on assets. Additionally, the lack of granular Q4 2025 burn rate data introduces ambiguity about the immediate impact of token scarcity.

Conclusion: A Case for Strategic Entry

Solana's on-chain supply dynamics, coupled with ecosystem upgrades and institutional adoption, suggest a compelling undervaluation scenario. The disinflationary model, combined with the potential for 1 million TPS and sub-150ms finality, positions Solana to capture a larger share of the DeFi and Web3 markets. While technical indicators caution against short-term optimism, the long-term thesis hinges on execution of upgrades and macroeconomic tailwinds. For investors with a medium-term horizon, Solana's current price represents a high-conviction entry point, provided key support levels hold.