Solana’s Wild Ride: How the Milei Scandal and Big Players Shape Its Future

A recent memecoin controversy involving Argentina’s President Javier Milei has sent shockwaves through the crypto market, leading to a sharp decline in Solana’s price. Following a controversial tweet about the LIBRA memecoin, Milei faces legal charges, while LIBRA itself plummeted from a staggering $4.5 billion market cap to just $200 million. Solana, which has become a hub for memecoin activity, has suffered as a result, dropping 20% from its highs last week.

Betting on Solana’s Future

Market sentiment has taken a hit, with Polymarket bettors significantly lowering their expectations for Solana’s performance. As of now, there’s only a 22% chance that Solana will break its previous all-time high of $293 by June 30—a stark drop from 85% when the bet was placed in January. Conversely, there’s an 86% probability that Solana will slide to $160 this month, reflecting growing investor caution.

Memecoins: A Double-Edged Sword for Solana

Solana has emerged as the go-to blockchain for memecoin launches, with platforms like pump.fun processing nearly $3 billion in volume over the past two weeks. While these tokens drive significant activity, they also increase volatility. According to Chris Chung, founder of Titan, Solana’s infrastructure has benefited from the memecoin craze, positioning the blockchain for long-term adoption despite short-term turbulence.

Institutional Confidence: VanEck, Pantera, and Bitwise Weigh In

Despite the recent turmoil, major investment firms remain bullish on Solana’s long-term prospects.

VanEck’s Bold Prediction

VanEck analysts foresee Solana reaching $520 by the end of 2025. Their optimism stems from Solana’s dominance in decentralized exchange (DEX) volume, revenue generation, and daily active wallets. They also highlight the network’s growing app ecosystem, which attracts top-tier developers and fosters increased adoption. Currently, Solana holds 15% of the total smart contract platform market, but VanEck predicts that figure will rise to 22% by year-end.

Pantera Capital: Solana’s Strength in Trading and Developer Growth

Pantera Capital’s analysts, Cosmo Jiang and Eric Wallach, point to record-breaking trading activity as a key driver for Solana’s momentum. Native DEXs like Raydium have consistently outperformed Ethereum in trading volume, with Solana now accounting for over 90% of new token launches. Furthermore, while the broader crypto industry experienced a 9% drop in developer activity, Solana saw an 83% increase in monthly active developers—an indicator of long-term growth potential.

The most significant catalyst, according to Pantera? The potential for a Solana ETF. They argue that the market underestimates the impact such an approval could have, potentially ushering in massive institutional inflows.

Bitwise: Opportunity in the Downturn

Bitwise’s Chief Investment Officer, Matt Hougan, takes a contrarian view, seeing opportunity amid the negative sentiment. With retail investors feeling disheartened by the altcoin downturn, Hougan believes institutional players will increasingly focus on Bitcoin, Ethereum, and Solana. “It is arguably the best time in history to invest in crypto,” he wrote before the Milei scandal unfolded.

The ETF Factor: Will It Be a Game-Changer?

While Solana faces near-term uncertainty, the long-term outlook hinges on regulatory approvals. Major firms—including VanEck, Bitwise, 21Shares, and Grayscale—have submitted Solana ETF applications, with mid-year as the earliest possible approval timeline. Polymarket bettors currently estimate an 83% chance of a Solana ETF being approved in 2024, though only 31% believe it will happen by July 31. If approved, JPMorgan estimates these ETFs could generate up to $6 billion in capital inflows.

BitGalactic’s Take: Is Solana’s Setback Temporary?

At BitGalactic, we see this as a pivotal moment for Solana. While the Milei scandal has undoubtedly shaken investor confidence, it doesn’t change the blockchain’s fundamental strengths: high developer engagement, growing institutional backing, and a robust ecosystem. The real question is whether Solana can distance itself from the volatility of memecoins and focus on sustainable growth. If an ETF approval comes through, it could serve as a major turning point, pushing Solana back to new highs.

For now, the market remains divided. Short-term pain is evident, but long-term believers are holding steady. Will Solana emerge stronger from this crisis, or is it in for a prolonged struggle? Only time will tell, but the pieces are in place for a major comeback.