Solana drops below $200 despite ETF hype – Should you be worried?

• Solana ETF approval odds rose to 85% on Polymarket, signaling strong institutional and investor confidence.
• SOL price hovered near key support at $197 as traders await SEC decisions on pending ETF applications.

The possibility of a Solana[SOL] ETF approval in 2025 has ignited market excitement, with Polymarket odds soaring to 85%.

The shift reflects increasing confidence in regulatory advancements and growing institutional interest in Solana as a legitimate investment vehicle.

With multiple asset management firms filing for a spot Solana ETF, the question remains: Will the SEC give the green light?

Market sentiment and institutional interest

The surge in Polymarket odds for a Solana ETF approval highlights a drastic shift in sentiment. Just months ago, the likelihood was pegged at a mere 3%.

The transformation stems from heightened institutional interest, as leading firms such as Grayscale, VanEck, 21Shares, Bitwise, and Canary Capital have submitted applications for a spot Solana ETF.

These applications are under SEC review, with critical deadlines approaching early 2025. Additionally, regulatory shifts following the resignation of SEC Chair Gary Gensler on the 20th of January 2025, may influence the approval process.

The appointment of a more crypto-friendly regulator could pave the way for a Solana ETF, much like the recent approval of spot Bitcoin[BTC] and Ethereum[ETH] ETFs.

Price begs to differ from the Solana ETF odds

Solana’s price has responded to the ETF speculation with increased volatility. SOL was trading at $197.53, at press time, down 2.91%, with a daily high of $203.84 and a low of $176.00.

At the time of writing, the 50-day Moving Average (MA) stood at $211.61, while the 200-day MA is at $182.08, highlighting a critical juncture for price movement.

Source: TradingView

AMBCrypto’s price chart analysis indicated that Solana recently tested the 200-day MA, a key support level.

A break below this level could signal a deeper correction, while a rebound may position SOL for another attempt at breaching the $225-$250 resistance zone.

Additionally, the MACD indicator suggests growing bearish momentum as the signal line crosses below the MACD line.

On-chain metrics: Solana network growth

A deeper look at on-chain data from Glassnode reveals a decline in new Solana addresses, which correlates with the recent pullback in price.

The number of new addresses has dropped from a January peak of 9 million to around 5 million, reflecting a slowdown in network activity.

Source: Glassnode

Despite the decline, the overall trend since late 2024 shows robust adoption. If the Solana ETF receives approval, this metric could grow continuously as institutional investors drive fresh capital into the ecosystem.

Historically, ETF approvals have acted as catalysts for both price and network expansion, similar to Bitcoin’s surge post-ETF approval.

What’s next for the Solana ETF?

With Polymarket odds at 85%, industry insiders are optimistic about a 2025 Solana ETF approval.

However, regulatory hurdles remain, particularly around classification and custody concerns. The SEC’s stance on Ripple[XRP] ETFs could serve as a benchmark for Solana’s fate.

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A Solana ETF could provide greater market legitimacy, boost liquidity, and accelerate mainstream adoption if approved.

Investors should watch for SEC decisions, key technical support levels, and continued institutional movements in the coming months.