Solana: On the Verge of a Breakout

CME: Solana ( SOL1!) and Micro Solana Futures ( MSL1!), #microfutures
On August 7th, President Donald Trump issued an executive order concerning the 401(k) retirement plans. The key points:
• The order aims to broaden the investment options available to participants in defined contribution plans by directing the Department of Labor (DOL) to explore regulatory changes.
• The order focuses on making "alternative assets" more accessible as investment options, including private equity, private credit, real estate, and digital assets.
• The order directs the DOL to review existing guidance and clarify fiduciary duties regarding alternative assets, with a focus on mitigating litigation risk that might discourage fiduciaries from offering these investment options.

Cryptocurrency market surged upon this big news. This order could open a significant new pool of capital in the form of 401(k) savings to cryptocurrencies. Market size of 401(k) is currently estimated at $8.7 trillion. Potentially, this could expand to cover the $12.2 trillion held in all employer-based defined contribution (DC) retirement plans.


According to CoinMarketCap, as of August 11th, the Top 5 Cryptos by market cap (excluding stablecoins) are:
1. Bitcoin (BTC), $2.4 trillion. At $120K, the king of Cryptos gained 27% year-to-date
2. Ethereum (ETH), $517 billion. At $4300, ETH also gained 27% in 2025
3. XRP, $190 billion ($3.20 each)
4. BNB, $111 billion ($800 each)
5. Solana (SOL), $96 billion. At $180, SOL is down 7.8% year-to-date

Why did SOL fall while BTC and ETH rebounded and reached new highs?

Solana is a blockchain platform that has rapidly gained popularity due to its focus on high speed, scalability, and low transaction costs. It is designed to support a wide range of decentralized applications (dApps), decentralized finance (DeFi) protocols, NFTs, and Web3 applications. Since its launch in March 2020, Solana has quickly become a leading challenger to rival Ethereum.

Solana's price declined in 2025 due to a combination of factors including broader market corrections, a decrease in activity on the network, particularly related to meme coins, and the impact of token unlocks from the FTX bankruptcy. Additionally, the Solana blockchain has experienced several outages, which have negatively impacted investor confidence.

In my opinion, the tail wind propelling BTC and ETH will also push SOL higher. The 401(k) new capital infusion could have an outsized impact on SOL due to its smaller market cap. Bargain hunters may scoop up SOL because of its relatively low prices. Earlier, ETH rebounded from $1,500 to $4,300 after BTC initiated a bull run. A similar catchup rise could happen to SOL.

Trading with SOL and MSL
CME Group launched Solana futures (SOL) and Micro Solana futures (MSL) on March 17th. Since launch, SOL and MSL have seen a total of 153.1K contracts traded, representing $4.6B in notional value and 31.2K equivalent SOL.

A trader sharing a bullish view on Solana could explore CME SOL or MSL futures.
SOL futures have a notional value of 500 Solana coins. With the current market price at $180, each SOL contract is valued at $90,000. To buy or sell one contract, a trader is required to post an initial margin of $38,210.

MSL futures have a notional value of 25 coins. Each MSL contract is valued at $4,500 at the current price level. A trader is required to post an initial margin of $1,911.

To maintain a long position in Solana over the long run, while enjoying capital efficiency through leverage, a trader may employ a futures rollover strategy.

Rollover is when a trader moves his position from the front month contract to another contract further in the future, prior to the expiration of his existing holding.

These steps illustrate how to hold a long Micro Solana Futures position overtime:
• In August, a trader buys (going long) a September contract (MSLU5).
• About two weeks before the contract expires on the last Friday in September, the trader will enter an offsetting trade, going short on MBTU5 to close his existing position. He would book a profit or loss, determined by the difference in selling and purchasing prices.
• Simultaneously, the trader would buy a December contract (MSLZ5) and reestablish a long position in Solana.
• In mid-December, the trader will close out MSLZ5 (going short), and buy a March 2026 contract (MSLH6), and continue to hold a long position on Solana.
• The trader would repeat the above steps, so far as he holds a bullish view.

Warnings: Solana prices are extremely volatile. Holding spot Solana coins with no leverage could face potential drawdown of 70%-80%. With leverage embedded in futures, a price move in the wrong direction could quickly deplete the available fund and trigger margin calls.

One advantage Micro Solana futures contracts have over the spot asset is the daily price limit. If MSL moves up or down 10% within the trading day, futures trading will be halted. This will give the market time to cool off and help investors avoid being blown out by short-term panic.

Happy Trading.

Disclaimers
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.

CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs tradingview.com/cme/