Solana (SOL) price could rally to $200 before a potential spot ETF approval on Oct. 10

Solana's (SOL) token price decreased by 4% over the weekend as it failed to sustain the $150 level. However, traders appear to be growing more confident as the $140 support remained intact for a whole week, an occurrence that hadn't happened in over two months.

As demand for leveraged SOL positions reached near record highs on April 30, traders are now turning their attention to the chances of a SOL rally above $200.

Solana futures open interest rose to 40.5 million SOL on April 30, marking a 5% increase from the previous month and approaching its all-time high. In dollar terms, this represents $5.75 billion in futures positions, placing it third in the cryptocurrency market and over 50% higher than the demand for XRP derivatives. Such strong adoption of SOL derivatives highlights strong interest from institutional traders.

Data shows increased demand for bearish leveraged SOL positions

Traders often associate increased demand for SOL futures with growing optimism. However, since longs (buyers) and shorts (sellers) are always matched, a rise in open interest does not necessarily indicate a bullish outlook. To better understand leverage demand in SOL futures, one can look at the funding rate for perpetual contracts.

Currently, the funding rate on SOL perpetual futures is negative, which shows more demand for bearish positions. The last period of moderate optimism ended on April 25 after a failed attempt to break above $156. The lack of bullish leveraged positions may be partly due to the 43% price gain SOL saw in the three weeks from April 8 to April 29.

A $200 target for SOL may seem ambitious, but the token was trading near $195 in mid-February, even after decentralized application volumes dropped by 80% from their January peak. While Solana has faced criticism for its heavy reliance on memecoins, there is more to the network than just speculation on new tokens.

Solana ranks second in total value locked (TVL), with $9.5 billion in deposits, including liquid staking, collateralized loans, automated yield platforms, and synthetic derivatives. Several Solana decentralized applications are among the top fee earners, with Meteora collecting $19.1 million in seven days, followed by Pump-fun with $18.6 million and Juto with $14.6 million.

Solana network dominates volumes on decentralized exchanges

Since April 14, Ethereum's average base layer transaction fee has been $0.65 or less, yet Solana's decentralized exchanges have seen nearly 90% higher trading volumes. Even when including the entire Ethereum layer-2 ecosystem, Solana led the past week with $21.6 billion in decentralized exchange activity.

Positive highlights from the Solana network include an 87% weekly increase in Raydium's volumes and a 58% rise in Meteora activity. So, even if demand for bullish leveraged positions stays flat, SOL's price could eventually reflect the improved onchain metrics.

Related: More than 70 US crypto ETFs await SEC decision this year

From a trading perspective, SOL could also benefit from the possible approval of a spot Solana ETF in the United States. Analysts at Mount Olympus believe the final deadline for the US Securities and Exchange Commission's decision is Oct. 10, with a 90% chance of approval. Still, SOL might rally above $200 before this event, as the network is well-positioned to attract new retail investors.