After falling more than 15% last week, Solana (SOL) has staged a strong recovery. SOL trades at $126.80 at the time of writing, marking a 2.12% intraday gain. The cryptocurrency’s market capitalization now stands at $64.24 billion, with a 24-hour trading volume of $3.42 billion.
This sudden rebound has raised questions: Why is Solana surging today? Let’s examine the key factors behind this recovery and what lies ahead for SOL.
Why Is Solana Rising? Key Drivers Behind the Recovery
Franklin Templeton Files for a Solana ETF
Franklin Templeton’s recent ETF filing is one of the biggest factors fueling Solana’s price recovery. The financial giant, which manages $1.53 trillion in assets, has officially applied for a Solana ETF in the U.S. through the Cboe BZX Exchange. This move follows its recent XRP ETF application, positioning Franklin Templeton as the largest player in both markets.
The Solana ETF race began on June 27 when VanEck filed first. Since then, multiple firms have joined the race, increasing investor optimism. Despite the SEC’s ongoing delays in deciding on XRP and Solana ETFs, market sentiment remains bullish. Polymarket bettors predict a 90% chance of Solana ETF approval, driven by a more crypto-friendly SEC administration. Growing institutional interest has played a major role in boosting SOL’s latest recovery.
SOL Inflation Cut Proposal Gains Validator Support
The ongoing debate surrounding the SIMD-228 proposal has also contributed to Solana’s rise. This proposal aims to cut Solana’s inflation rate by 80%, which could reduce staking rewards and limit new SOL supply. So far, 37.5% of validators support the proposal, 17.2% oppose it, and 1.2% abstained.
If validators approve the proposal, it could ease selling pressure on SOL. However, concerns remain about its potential impact on network decentralization.
Galaxy Digital Stakes $39M in Solana
Institutional activity has further reinforced confidence in Solana. Galaxy Digital, led by Michael Novogratz, recently staked 274,253 SOL ($39.15 million) after withdrawing 282,500 SOL ($40.5 million) from Coinbase and Binance. This move suggests a strategic investment in Solana’s long-term potential.
Galaxy Digital had previously acquired SOL during the FTX bankruptcy auction on March 1, 2025. Its continued investment signals strong confidence in the asset’s future.
Will Solana Crash Again or Continue Gaining?
Despite Solana’s strong rebound, several factors could trigger another price drop.
Large SOL Transfer from Binance Raises Questions
A recent major transfer from Binance has raised concerns. According to Lookonchain, an anonymous wallet withdrew 201,755.31 SOL (~$25.01 million) within the past few hours. Large transfers like this often indicate potential investments, staking, or security measures. However, they can also hint at incoming sell pressure.
Declining Network Activity Sparks Concern
While Solana’s price has recovered, network activity has declined. Analyst Ali Martinez highlighted a significant drop in Solana’s transfer volume, which fell from 4,500 million in November 2024 to below 500 million in March 2025.
Solana’s DeFi activity has also dropped from $12 billion to $7 billion, while monthly transaction fees have decreased from $250 million to $89 million. If this trend continues, investor confidence and network utility could weaken, raising the possibility of another downturn.
Solana Price Prediction: Can SOL Reach $500?
Solana must break the $130 resistance level to maintain upward momentum. If it fails, the price could fall back to $124, with major support at $120. A drop below this level could push SOL toward $110 or even $100, especially if network activity declines.
Read also: Charles Hoskinson Engages with Japanese Officials on Crypto Regulations
However, if SOL successfully breaks past $130, it could rally toward $150 in the short term. Due to current market and regulatory uncertainties, reaching $500 in 2025 remains uncertain.
Conclusion
Solana’s recent recovery stems from institutional interest, ETF optimism, and a potential reduction in supply. However, concerns over declining network activity and large fund transfers persist. If SOL breaks key resistance levels, further gains could follow. The coming weeks will determine whether Solana maintains its momentum or faces another downturn.
