Solana (SOL) is navigating significant volatility, mirroring broader corrections, currently trading at $191 at the press time.
The latest downturn comes after Federal Reserve Chair Jerome Powell’s hawkish remarks, which have rattled market sentiment. The CME FedWatch tool now assigns a 95.5% probability that interest rates will remain unchanged at the March 19 meeting, which could weigh on assets like Solana.
While Solana faces near-term pressure, the broader market downturn raises concerns about the long-term trajectory of digital assets in 2025. To gauge what lies ahead, Finbold consulted DeepSeek to analyze where Solana might stand by the end of the first quarter of 2025.
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DeepSeek identifies key factors driving Solana’s price
With both its online functionality and the DeepThink (R1) AI model enabled, DeepSeek AI has identified both bearish and bullish factors shaping Solana’s price trajectory.
Bearish case
Solana faces several headwinds that could drive its price lower in Q1, 2025.
A key concern is declining on-chain activity, with daily transactions on the Solana network plummeting 66% to 23,935 from its peak on January 23. This drop in network engagement indicates weaker demand for SOL, especially as the memecoin frenzy that fueled its 2024 rally is fading.
The Trump (TRUMP) memecoin, previously a major contributor to Solana’s surge, has crashed 80% from its peak, further dampening market enthusiasm.
The biggest concern, however, is the looming token unlocks, set to inject 11.3 million SOL into the market over the next three months. If demand fails to absorb the increased supply, SOL could face further selling pressure in the months ahead.
Bullish case
Despite current headwinds, DeepSeek AI predicts that Solana could rally by the end of Q1 2025, driven by institutional interest and ecosystem expansion.
The potential approval of a Solana exchange-traded fund (ETF) remains a major upside catalyst, with the SEC acknowledging multiple ETF filings from 21Shares, Bitwise, Grayscale, and VanEck.
Bloomberg analysts Eric Balchunas and James Seyffart estimate a 70% probability of approval in 2025, which could unlock significant institutional capital and further legitimize Solana as an investment vehicle.
Institutional players are also showing confidence, with Franklin Templeton recently filing for the Franklin Solana Trust in Delaware, a step that often precedes a formal ETF application.
Beyond the ETF push, VanEck has projected that SOL could reach $520 by 2025, citing Solana’s rising dominance in the smart contract platform (SCP) sector.
Analysts estimate that Solana’s market share in this space could expand from 15% to 22% by year-end, fueled by macroeconomic factors such as U.S. M2 money supply growth, which has historically correlated with crypto market growth.
Solana’s Q1 2025 outlook
Solana’s Q1 2025 outlook remains uncertain, with its price trajectory hinging on institutional adoption and macroeconomic forces.
According to DeepSeek AI, SOL could surge to $250, a 27% gain from current levels, if ETF approvals unlock institutional inflows and drive renewed investor confidence.
However, mounting market pressures, including weak demand, looming token unlocks, and persistent macroeconomic uncertainty, could send Solana plunging to $120, marking a 39% decline.
With the March 19 Fed meeting, ETF approvals, and on-chain activity trends shaping sentiment, the coming months will be crucial in determining Solana’s next move.
Featured image via Shutterstock
