The SOL bears have disappeared: Here’s what’s needed to push Solana to $260

Summary of Current Solana Market Trends

Market optimism for Solana’s Sol token is evident but lacks strong bullish positioning.

Network activity and predictions around ETFs show mixed signals, contributing to a cautious outlook among key market players.

Solana’s native token, known as Sol (Sol), surged by 28% over the past three weeks, indicating a turnaround after a prolonged bearish period. While larger market participants remain skeptical, this uptick has fostered a sense of moderate optimism in Sol’s derivatives. Traders are now pondering what might trigger a new rally toward the $260 mark.

Currently, Sol’s annual funding rate sits at around 16%, reflecting some enthusiasm from retail investors but still falling within a healthy range. Generally, the funding rate for perpetual contracts hovers between 5% to 15%, suggesting that long positions are incurring extra costs to maintain their market exposure.

Despite the recent price increase, Sol is lagging in performance compared to the overall altcoin market. For instance, during the same period, ether (ETH) rose about 51%, and XRP increased by 41%. As Sol approaches its highest point in five months—around $190—traders don’t seem to be particularly enthusiastic about it.

Need for Network Growth

A bullish leveraged position isn’t strictly necessary to push SOL back to the $260 level, yet ongoing sell pressures could persist without renewed confidence. The performance of Sol heavily depends on the activity within the Solana network, which is currently down 85% compared to January’s levels.

On a brighter note, Solana’s network fees increased by 27% over the last 30 days, while many competing platforms experienced stagnation or significant declines. For example, the BNB chain saw a 30% drop in fees, while a key Ethereum Layer 2 platform fell by 19%.

In the last month, Solana generated $32.9 million in network fees, reaching a total value locked (TVL) of $12 billion. In contrast, Ethereum boasts $91 billion in deposits. This data is encouraging for Sol holders, considering that staking yields are closely tied to network revenues.

Neutral Futures Market

Understanding the monthly futures market can provide insight into whether professional traders are getting more optimistic about the $260 target. In a neutral market climate, these contracts usually trade at a premium of 5% to 10% above the spot price.

On Monday, Sol’s three-month futures premium hit a neutral level of 6% for the first time in five months. Notably, a recent failed attempt to break above $200 on Wednesday did not alter traders’ outlook. While the sentiment remains cautious, this represents a notable shift from prior bearish attitudes.

Investors are keenly observing the potential approval of multiple spot Solana exchange-traded funds (ETFs) by the SEC. Such an approval could foster institutional interest similar to what has been seen with ether ETFs.

The Spot Staking ETFs (SSKs), which launched on July 2, have already accumulated $130 million in managed assets. With Solana’s increasing network activity and rising anticipation for Spot ETF approval in the U.S., it seems plausible that Sol could reach $260 in the near term.