Solana Is Poised for a Monster Move

Key Points

• Solana is exposed to a mix of regulatory, economic, revenue, and ecosystem catalysts right now.

• Some of those catalysts magnify the beneficial effects of the others.

• The odds are good that this coin is going to start flying upward soon.

• 10 stocks we like better than Solana ›

Just a few summers ago, skeptics were busy drafting Solana's (CRYPTO: SOL) obituary after a string of high-profile fraud-related meltdowns amid a slew of network hiccups. Yet today it's humming along at record speeds, gobbling up developer mindshare, and flirting with higher prices than ever before. The presence of medium-term momentum alone should not ever constitute an investment thesis, but in Solana's case, a rare mix of fundamental and macro forces is starting to look downright combustible to the upside.

Four big trends are lining up at once. Add them up and the next 18 months could be an absolutely monstrous period for returns. Let's dive in and explore why.

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Four catalysts could power a huge move

Remember the big picture with crypto here. Price follows usage, usage follows incentives or ease of use, and incentives follow a friendly macro backdrop. Therefore solid macro conditions can set the stage for all the other factors to quickly gel in a coin's favor, and that's what's happening right now with Solana.

First, its applications are seeing real use. In the second quarter Solana's decentralized applications (dApps) generated about $570 million in revenue, capturing 46.3% of all blockchain-based revenue and outpacing bigger rivals like Ethereum. When real users pay real fees, token holders often benefit through higher network demand and a sturdier narrative of real-world utility.

The macro tailwinds are also looking quite favorable.

The Federal Reserve left its interest rate policy unchanged in June, but its own projections still account for two cuts before 2026. Lower borrowing costs typically lead to investors taking on riskier investments. Crypto has thus historically rallied significantly whenever liquidity tides turn as a result of central bank actions, like they are in the process of doing globally at the moment.

Image source: Getty Images.

Assuming even a modest easing cycle arrives, this backdrop could amplify any chain-specific good news and ensure that there's plenty of money flowing through the financial system's pipes.

On the incentives and ease of use front, there is a very high probability that the Securities and Exchange Commission (SEC) will green-light a spot Solana exchange-traded fund (ETF) in 2025. Assuming that happens, it'll make it trivial for investors with traditional finance accounts to invest in Solana directly, without needing to sign up for a crypto wallet or anything similar. In other words, it'll spark capital inflows.

Anticipation alone has already sparked $78 million in flows to Solana-linked funds launched offshore over the past 30 days. If the approvals arrive on schedule later this year, U.S. asset managers will need to accumulate coins to seed and rebalance their products, thereby shrinking the liquid float. This is bullish.

Finally, there's another important trend supporting the idea that Solana is about to go on a tear.

On July 4, the value of tokenized stocks issued on Solana hit $48.5 million, more than tripling in just two weeks as new issuers launched their tokens. Tokenization of real assets like stocks is still tiny in the big scheme of things, yet industry analysts see trillions of dollars in traditional assets eventually moving on-chain to be managed more efficiently.

Solana's low fees and fast settlement have given it an early edge, and it's just getting started.

Putting the pieces together

Taken together, these forces hint at a chain that could see an entire bazaar's worth of demand. But the story gets even better when we look at how they reinforce each other.

Application revenue provides the cash-flow evidence to institutional investors that Solana is more than a chain for meme-driven hype or gambling. That hard data makes it easier for ETF sponsors to argue the chain deserves mainstream exposure. ETF approval, in turn (assuming it happens), invites legions of dollar-cost averaging investors who probably care less about which wallet to download and more about hitting a "buy" button inside their brokerage app. Those retail dollars supplement the institutional capital already arriving via tokenized equities.

Layer easier monetary policy on top of this stack, and the coin's value can easily grow faster than at any point since its debut in 2021.

Of course, if inflation resurges and the Fed is forced to stand pat rather than slash rates further, risk assets could take a beating. Another risk is that a serious network outage would dent Solana's credibility just when asset managers are scrutinizing reliability metrics. Furthermore, the SEC could also drag its feet on ETF approvals for longer than what investors are expecting. Finally, tokenization is still exploratory; if legal frameworks for managing assets on the blockchain end up stalling, today's blistering growth might hit a brick wall.

Still, for investors willing to accept crypto's trademark volatility, the balance of risk to reward appears favorable here. Solana enjoys genuine user traction, clear institutional on-ramps, and a macro setup that looks incrementally kinder than it did a year ago.

Buying a partial position now and adding on dips could be a sensible strategy for building exposure before the full cocktail of catalysts is priced in.

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Alex Carchidi has positions in Ethereum and Solana. The Motley Fool has positions in and recommends Ethereum and Solana. The Motley Fool has a disclosure policy.