Is Solana a Good Investment After a 65% Drop From Its Record High?

Solana (CRYPTO:SOL) trades 65.4% below its record high of $293, which it reached on January 19, 2025. SOL trades around $101, and investors are questioning whether the drop makes Solana a good investment. Despite rolling out its most significant upgrade in years and attracting interest from a major Wall Street firm, SOL’s price has continued to decline.

Recently, SOL has experienced considerable price swings. It dipped to $72 on August 2, climbed to $122 by September 26, then lost about 40% of that gain. Today, it traded between $101 and $105.

Many investors are fixated on the $293 record high, and reaching it again would require about an 189% gain. So, is SOL a good investment after this 65% drop? What factors would need to align for it to climb back to its former peak?

Solana Would Need a $173 Billion Market Cap to Regain Its Record

To regain its record price, Solana would need a market cap of around $173 billion. This figure is derived from multiplying SOL’s price by the number of coins in circulation. Solana’s market cap stands at approximately $59.8 billion, based on roughly 589.7 million SOL tokens, making it the seventh-largest cryptocurrency.

For SOL to return to $293 with the current number of coins, its market cap would need to nearly triple from its October 24 level. Additionally, the ongoing supply increase poses an obstacle to that recovery.

Solana has no maximum supply and issues new SOL tokens as staking rewards, so the number of coins in circulation continues to grow. The total supply has already reached about 636.3 million SOL, giving Solana a fully diluted valuation of approximately $64.6 billion. Thus, returning to $293 would require more capital than it did to reach the January 2025 peak.

Alpenglow and JPMorgan’s Funds Brought Solana Good News

Solana got exciting news recently with the introduction of Alpenglow, a new consensus protocol developed by Anza. This protocol is essential as it provides the rules that validators—computers running the network—use to confirm which transactions are valid. Alpenglow went live on October 21 and significantly improved transaction finality, reducing it from around 12.8 seconds to just 150 milliseconds. This speed could make the network more attractive for payment and trading applications.

On October 22, J.P. Morgan Asset Management launched two funds on Solana targeting qualified U.S. investors. They are the My OnChain Net Yield Fund and the JPMorgan OnChain Token Money Market Fund. These funds leverage blockchain technology, but they haven’t disclosed the dollar amount they hold on Solana, making the full impact difficult to assess.

Another point of interest is staking. Staking involves locking up SOL tokens to help secure the network in exchange for rewards. While it’s a positive sign that 72.8% of Solana’s staking is based in Europe—indicating a strong, professional operator base—it also risks concentrating the network’s security in a single region.

Why SOL Continues to Drop Despite Good News

Interestingly, SOL’s price has not responded positively to recent good news. Between October 19 and 22, Solana ETFs experienced $17.3 million in net outflows, according to SoSoValue—during the same days as the Alpenglow launch and the JPMorgan fund debut. Over the week, SOL also dropped by 2.4%.

The broader market trend is also concerning. SOL has declined by 13.2% over the past month and 47.2% over the past year, while Bitcoin (CRYPTO:BTC) has lost 27.4% over the same period. Notably, SOL has underperformed compared to Bitcoin.

Furthermore, SOL’s performance is closely tied to Bitcoin’s market patterns. Bitcoin trades near $80,500, which is 36.2% below its all-time high of $126,080. Solana’s 33.3% gain over the past 90 days coincided with a 23.4% rise in Bitcoin, suggesting SOL often amplifies Bitcoin’s price moves in both directions.

Is Solana a Good Investment at $101?

For long-term holders who believe faster transaction times and financial products could increase Solana’s usage, buying SOL at $101 could be a significant discount to its previous high. However, this approach requires patience, as investors must withstand possible declines similar to the 47.2% drop over the past year without selling.

For those seeking short-term gains, the outlook appears less promising—especially since positive news hasn’t brought in ETF inflows. It seems unlikely that SOL could return to $293 before the end of 2027.

For SOL to improve, several conditions must be met. First, Solana ETFs would need to transition from outflows to consistent inflows. Additionally, Bitcoin would need to rebuild toward its record. Crucially, SOL would need to break through its September high of $122.

A solid weekly close above $122, paired with positive ETF flows, could signal a robust recovery. By contrast, continued ETF outflows and a drop below $100 could bring the previous low of $72 back into focus.

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