Solana (SOL) investors who have been buying the altcoin over the past 6 to 12 months appear to be shifting to a long-term investment strategy, as they now hold 27% of the total SOL supply.
The spike in accumulation suggests that the altcoin is in stronger demand in 2024 than in other years, giving a bullish outlook for next year. Does this mean that SOL will trade at a much higher price in 2025?
Short-term Solana holders have the advantage
One way to see how much supply each pool holds is to look at the Realized Cap HODL Waves indicator. In essence, Realized Cap HODL Waves shows the on-chain cost basis of a cryptocurrency across different pools of wallets, highlighting the distribution of holdings over the time of the buyback.
According to Glassnode, the majority of SOL accumulation has occurred this year, with investors holding 26% of the total supply in the 6-12 month group. The 3-6 month group holds 13%, while the 1-3 month group holds 11%.
In contrast, those who bought SOL in the past 1 to 5 years hold a smaller portion. This shows that short-term SOL investors are more optimistic about the altcoin's price action in the long term.
Realized Cap HODL Waves Indicator | Source: Glassnode
Furthermore, the price of SOL is currently above its fair value, indicating further upside potential. To put it in perspective, fair value represents the value of all Bitcoins based on the price they last traded on-chain, divided by the total supply.
This metric provides the average on-chain cost basis at which all tokens are purchased. When the price of a cryptocurrency falls below its fair value, a correction is likely. But in this case, Solana's fair value is $133.34, which is much lower than it is now.
If this trend continues, the price of this altcoin could surge in 2025 if market conditions improve.
SOL Fair Value | Source: Glassnode
SOL Price Prediction: To Hit $500 By 2025?
Based on technical analysis, SOL price has formed a bullish flag pattern on the daily chart.
A bull flag is a bullish pattern characterized by two price increases, separated by a short-term consolidation period.
As shown in the chart below, this pattern begins with a strong price increase, forming a flagpole as buyers overwhelm sellers. A retracement then occurs with parallel upper and lower trendlines following, forming the flag.
The pattern initially pulled SOL down to $213.64. However, the price has since recovered and is currently trading around $220. If SOL breaks above the pattern’s upper trendline, the price could hit $290 before the end of 2024.
SOL Price Analysis – 1 Day | Source: TradingView
In a strong bullish scenario, SOL could hit VanEck’s $500 forecast. However, if the overall market conditions deteriorate in 2025 or Solana investor supply declines, the token could slide to $189.36.
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