Solana's SOL Rebounds 20%, VanEck Predicts $520 by Year-End

Solana's native cryptocurrency, SOL, has staged a remarkable 20% rebound after plummeting to $187 lows on February 3. Despite this recovery, SOL remains 32.7% below its all-time high from January 19. However, VanEck, an investment manager, has predicted that SOL could reach $520 by the end of this year.

VanEck's prediction is based on several factors, including rising demand for smart contract platforms (SCP) and expected increases in the M2 money supply. M2 measures the U.S. money supply, including cash, checking deposits, and readily convertible near-money. Continued growth in the M2 money supply is a bullish factor for risk assets, as it signals that more liquidity is entering the system, which usually finds its way into risk assets first.

The investment firm predicts that the U.S. M2 money supply will hit $22.3 trillion by the end of the year, while the smart contract platform market is expected to grow 43% to a record high of $1.1 trillion during this period. Meanwhile, Solana's share of the smart contract platform market cap currently stands at 15%, but VanEck sees this rising to 22% by the end of the year. This projection is supported by Solana's developer dominance, increasing market share in DEX volumes, revenues, and active users.

Using an autoregressive (AR) forecast model, VanEck estimates that Solana's market cap will reach ~$250B, implying a SOL price of $520 based on ~486M floating tokens. To reach this target, the fifth-largest crypto would need to jump by roughly $163% in 2025.

In the meantime, a potential SOL U.S.-listed exchange-traded fund could significantly impact its price. VanEck is among several asset managers who submitted paperwork for a Solana exchange-traded fund in 2024. The U.S. Securities and Exchange Commission (SEC) had previously refused to acknowledge multiple filings for ETFs tracking SOL due to concerns about the crypto's categorization as a security. However, the SEC made a notable step toward greenlighting SOL investment products in the US on February 6 after Grayscale's amended application.