Key takeaways:
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SOL futures and funding rates show moderate optimism, but no strong bullish positioning yet.
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Network activity and ETF anticipation support upside, but confidence among big players remains muted.
Solana’s native token, SOL (SOL), rallied 28% in three weeks, creating some positive momentum after nearly two months of bearish price action. The move has sparked moderate optimism in SOL derivatives, although whales and market makers have yet to turn bullish. Traders are now questioning what might unlock a new rally toward $260.
The current 16% annualized funding rate for SOL reflects moderate enthusiasm from retail traders but remains within a healthy range. Under neutral conditions, the annualized funding rate for perpetual contracts typically ranges between 5% and 15%, showing that long positions are paying a premium to maintain exposure.
Despite the recent 28% price increase, SOL has lagged behind the broader altcoin market capitalization.
For example, Ether (ETH) rose 51% over the same three-week period, while XRP jumped 41%. So even though SOL is now near its highest level in five months, at around $190, traders are not showing strong excitement.
SOL needs network growth and a sentiment boost to reach $260
While bullish leveraged positions are not strictly necessary for SOL to reclaim the $260 level, without renewed confidence, selling pressure may persist. SOL’s performance continues to depend heavily on Solana’s network activity, which remains 85% below January levels.
On the bright side, Solana’s network fees rose 27% in the past 30 days, while many competitors saw stagnation or steep declines. BNB Chain, for example, recorded a 30% drop in fees, and Base, the leading Ethereum layer-2, saw a 19% decline.
Solana generated $32.9 million in network fees over 30 days, with $12 billion in total value locked (TVL). In comparison, Ethereum holds $91 billion in deposits, according to DefiLlama. These figures are promising for SOL holders, given that staking yield is closely tied to network revenue.
SOL futures are neutral: The bear phase is over
To gauge whether professional traders are warming up to the idea of a rally to $260, it’s worth examining the monthly futures market. Under neutral market conditions, these contracts usually trade at a 5% to 10% premium over spot prices, accounting for the longer settlement period.
On Monday, SOL’s 3-month futures premium reached the neutral 6% level for the first time in five months. Notably, the failed breakout attempt above $200 on Wednesday didn’t affect traders’ outlook. While the mood is still far from bullish, this shift marks a clear departure from the earlier bearish sentiment.
Related: Solana co-founder calls memecoins, NFTs ‘digital slop’ in heated debate
Investors are closely watching for the potential approval of multiple spot Solana exchange-traded funds (ETFs) by the US Securities and Exchange Commission (SEC). Such a move could unlock institutional demand, mirroring the success of Ether ETFs and building on existing products like the REX-Ospray SOL Staking ETF (SSK).
Registered under the Investment Company Act of 1940, the SSK ETF does not require the typical SEC S-1 filing. Since launching on July 2, it has accumulated $130 million in assets under management. Given Solana’s strong network activity and growing expectations for a spot ETF approval in the US, the likelihood of SOL reaching $260 in the short term appears strong.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
