Solana (SOL) recently surged 7%, briefly climbing to $161, following news of the first staking-enabled exchange-traded fund (ETF) set to launch in the coming week. This development reignited speculation about whether institutional demand could propel SOL past the $200 mark. However, while the announcement brought short-term momentum, deeper on-chain and market dynamics suggest the rally may lack long-term sustainability.
The price quickly pulled back to $154—a still-impressive 4% gain over 24 hours—highlighting cautious sentiment despite positive headlines. The proposed REX-Osprey SOL + Staking ETF is structured as a C-corporation, a strategic move designed to bypass traditional SEC approval hurdles. Unlike standard spot Bitcoin or Ether ETFs, this corporate structure allows for faster deployment but comes with tax trade-offs: both the entity and investors are taxed on staking rewards, reducing net yield.
Why Institutional Demand Alone Won’t Drive SOL Higher
While the ETF news is innovative, its broader impact may be limited. The same C-corp model could theoretically be applied to nearly any altcoin, diluting Solana’s first-mover advantage. More critically, current institutional appetite for Solana remains weak compared to Ethereum.
Consider Grayscale’s Solana Trust (GSOL), which has been operational for over two years but manages only around $75 million in assets. Contrast that with Grayscale’s Ethereum Trust (ETHE), which held $10 billion in assets just one month before the official Ethereum ETF launch in July 2024. This staggering gap underscores a key reality: despite Solana’s technical strengths, it has yet to capture meaningful institutional capital.
Without strong pre-existing demand, even an ETF launch may fail to create sustained upward pressure on price.
Supply Pressure and On-Chain Weakness Undermine Bullish Momentum
Even if investor sentiment improves, several structural challenges threaten to cap SOL’s upside:
- Staking unlocks: Over the next two months, approximately $585 million worth of staked SOL will become liquid, according to DefiLlama. This influx of supply could weigh on prices, especially if holders choose to sell.
- DApp-related selling pressure: Major Solana-based decentralized applications (DApps) have been consistently offloading SOL. For instance, token launch platform Pump fun reportedly moved over $404 million in SOL to exchanges in 2025 alone, per Onchain Lens data. Such activity fuels selling pressure and limits price appreciation.
- Declining network revenue: Despite memecoin hype driving user engagement at times, Solana’s network revenue has plummeted more than 90% since January. This collapse signals weakening economic activity on the chain—hardly a foundation for a bull market.
- Competition from Ethereum L2s: Solana’s positioning as a high-throughput platform for scalable DApps has taken hits. Robinhood chose an Ethereum Layer-2 network—not Solana—for its tokenized stock trading debut. Similarly, Coinbase partnered with Shopify on June 12 to enable on-chain payments via Base, an Ethereum L2 that settles on the Ethereum mainnet.
These developments reinforce Ethereum’s ecosystem dominance in real-world financial applications, challenging Solana’s narrative as the go-to chain for institutional-grade DeFi and tokenization.
Market Sentiment: Cautious Despite Short-Term Gains
Futures funding rates offer insight into trader positioning. When bullish leverage demand spikes, annualized funding rates can exceed 10%. Conversely, negative rates indicate bearish dominance.
Despite a 12.5% price rise over four days, SOL’s funding rate has not broken above 10%—the neutral threshold for strong bullish conviction. This suggests traders remain hesitant to commit significant leveraged capital, reflecting underlying skepticism about the sustainability of the rally.
At $154, SOL remains nearly 50% below its all-time high of $295. With on-chain activity stagnant and institutional inflows minimal, the path to $200 appears steep.
Frequently Asked Questions (FAQ)
Q: What is a staking-enabled ETF?
A: A staking-enabled ETF allows investors to gain exposure to a cryptocurrency like Solana while also earning staking rewards. Unlike traditional ETFs that only track price, these funds actively participate in network validation to generate yield.
Q: Why hasn’t SOL rallied strongly despite ETF news?
A: While ETF developments are positive, they’re not enough alone. Weak institutional adoption, upcoming token unlocks, DApp selling pressure, and declining network revenue are counterbalancing bullish sentiment.
Q: How does the REX-Osprey ETF differ from Bitcoin ETFs?
A: It uses a C-corporation structure to avoid direct SEC approval but incurs double taxation—once at the corporate level and again for investors—making it less tax-efficient than traditional spot ETFs.
Q: Can SOL reach $200 in 2025?
A: It’s possible under strong macro conditions or unexpected institutional inflows, but current fundamentals—low AUM in existing trusts, high sell pressure, and weak revenue—make a sustained move above $200 unlikely without major catalysts.
Q: Is Solana losing ground to Ethereum Layer-2s?
A: Yes. Platforms like Base and Arbitrum are gaining traction for real-world financial applications (e.g., tokenized stocks, merchant payments), eroding Solana’s edge in scalability and developer adoption.
Q: What factors should investors watch for SOL upside?
A: Key indicators include rising Grayscale Solana Trust (GSOL) assets under management, declining staking outflows, increasing network revenue, and major partnerships or product launches on Solana.
Final Outlook: Innovation Isn’t Enough Without Adoption
Solana’s technology remains robust—fast, low-cost, and developer-friendly. The staking-enabled ETF is an innovative step toward broader financial integration. But technological leadership doesn’t guarantee market leadership.
For SOL to sustainably rise toward $200 and beyond, it needs more than headlines. It requires growing institutional trust, stronger on-chain fundamentals, and reduced sell-side pressure from insiders and DApps. Until those conditions improve, rallies driven by news alone are likely to fizzle.