Key Points
Solana's next big update might help to arrest its decline.
But the macro environment isn't going to be working in its favor.
Grabbing even more of the tokenized stock segment could help expedite the coin's recovery.
- 10 stocks we like better than Solana ›
Down 43% this year so far, Solana (CRYPTO: SOL) holders are doubtlessly ready for their fortunes to turn. Some have conjectured that a big rally is right around the corner. Others suggest that the chain is on its deathbed. The historical data suggest that a near-term pop is likely to occur, though it might not disrupt the broader downtrend.
So is Solana going to go on a tear, or peter out entirely?
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Why this isn't the moment to hold your breath
Let's start by throwing some cold water on the idea that Solana's price can simply make a V-shaped reversal back to its highs.
Aside from the ongoing crypto bear market, the broader macro environment isn't conducive to any coins experiencing a roaring rally. That doesn't mean it's impossible for assets to rise in price, or even that it's impossible for coins to rise by a lot, but it does mean that the fuel for a breakout is in short supply, which lowers the price ceiling for a rally and the floor for a further decline at the same time.
In short, liquidity constrains every altcoin rally, and liquidity isn't available for cryptocurrencies. The Federal Reserve is facing higher-than-desired core inflation, and an interest rate hike now looks likelier than a cut. Whereas cuts tend to stoke liquidity, hikes tend to starve it. Furthermore, most of the market's attention is on the tech sector, with memory chips, semiconductors, and AI companies, not to mention a handful of massive IPOs, capturing a lot of the available capital.
And that's before even approaching the fact that sentiment about Solana is very poor right now.
Image source: Getty Images.
There could be a future setup forming
Solana probably won't go the way of the dodo despite its low odds of rallying here.
Alpenglow, the consensus overhaul and next big update for the chain, went live on a community test cluster on May 11. It could launch sometime in the third quarter of 2026. If it does, transaction finality on the chain will fall dramatically from 12.8 seconds to roughly 100 to 150 milliseconds, making it faster than a typical credit card authorization (which takes from 1 to 3 seconds). The redesign also frees up block space that's currently consumed by vote transactions, so it'll be a massive unlock for Solana's throughput capacity. And it's already the leading chain in terms of its throughput, so one of its distinctive strengths is going to be accentuated even more.
Solana is additionally already claiming one of the prizes that Alpenglow's improvements are meant to defend. Through mid-2026, the network is capturing a large majority of on-chain tokenized stock trading volume. It's a natural venue for tokenized stock trading thanks to its low fees and rapid transaction settlement times. If Solana continues to be a leader in the tokenized equity segment, it could attract significant capital to the chain and generate substantial trading fees, which could be good for holders.
Nonetheless, don't load up on Solana here. Solana belongs on a watch list for after the macro backdrop starts to improve; check back in a quarter or so.
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Alex Carchidi has positions in Solana. The Motley Fool has positions in and recommends Solana. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
