Solana’s price has plunged more than 70% from its all-time high.
But several catalysts could drive it higher over the next two years.
Solana's (CRYPTO: SOL) price hit an all-time high of $293.31 on Jan. 18, 2025. But today, it trades at about $77. Along with other cryptocurrencies, Solana slumped over the past year as fears of interest rate hikes drove investors toward more conservative investments. However, I believe a few catalysts could drive Solana's price back above $200 within the next two years.
Solana is the world's second-largest developer-oriented proof-of-stake (PoS) blockchain after Ethereum (CRYPTO: ETH). Like Ethereum, Solana supports staking (locking up tokens to earn yield) and smart contracts (for developing decentralized apps) on its blockchain.
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However, Solana can process thousands of transactions per second, whereas Ethereum can process only a few dozen per second on its Layer-1 blockchain. That's why Solana is gaining new developers at a much faster rate than Ethereum.
Solana's speed has also made it an attractive way for financial institutions to accelerate transactions and tokenize real-world assets (RWAs), including stocks, bonds, commodities, real estate, and even fine art. It's also a popular platform for stablecoins, which are tethered to fiat currencies like the U.S. dollar and used for faster, cheaper settlements.
BlackRock has deployed tokenized funds on Solana, while Visa and Shopify use Solana to process their stablecoin-based payments. Stripe also supports native Solana payments and fiat-to-crypto onramps for decentralized applications.
Solana isn't scarce because it continually issues more tokens to developers and doesn't have a hard limit on its total supply. But it's useful -- and its value will keep rising as it attracts more developers and financial partners. Virbu Norby, the chief product officer of the non-profit Solana Foundation, recently claimed Solana could become the "Netflix or the Amazon of finance" as that ecosystem expanded.
Three catalysts could drive Solana back above $200 within the next two years. First, the broader crypto market should warm up again if the macro environment stabilizes and the Fed cuts its benchmark rates again. Second, the growing use of stablecoins and tokenized RWAs could make Solana's blockchain a major rail of the financial sector.
Lastly, the passage of the CLARITY Act -- which aims to establish a clear federal framework for regulating digital assets -- could fortify Solana's position as a leading digital commodity. Without any more fears of a regulatory crackdown or a reclassification as a digital security, Solana could finally grow again and attract as much attention as Ethereum or Bitcoin. Its spot-price exchange-traded funds (ETFs), which were approved last year, should also attract more retail and institutional investors.
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Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Bitcoin, BlackRock, Ethereum, Netflix, Shopify, Solana, and Visa. The Motley Fool has a disclosure policy.