Treasuries bring a lot of buying power due to their debt-led purchase model. For Bitcoin, they have created the much-needed price stability with their high demand, and we expect the same to happen in Solana.
However, this treasury-led also has some downsides.
In this article, we will understand how the buying power of Treasuries create price rallies in Solana and how these rallies lead to better development in the blockchain.
Do You Know How These 5 Factors Affect Price Swings in Crypto Markets?
How Liquidity Impacts Cryptocurrencies?
Liquidity in the crypto markets is the term that is used to define how easy it is to buy or sell a certain cryptocurrency. Cryptocurrencies with higher liquidity will have a higher number of people buying and selling them which results in the ease of trading.
For all cryptocurrencies, liquidity has a profound impact on price. Cryptocurrencies with greater liquidity will attract more buyers, because in case the investment goes wrong, they can easily sell it and cash out. Therefore, the top liquid cryptocurrencies tend to have a better price discovery.
At this stage, it is essential to clarify that liquidity does not equalize with token circulation. If a token has 1 billion coins and 1 million trades per day (like SUI), it will have greater liquidity along with a high token supply. However, a cryptocurrency with the same token supply (i.e., 1 billion tokens) might be illiquid due to lower numbers of people buying and selling it (say 10,000).
Understanding Demand and Supply
Treasuries buy cryptocurrencies and generate a demand. This demand attracts the suppliers, i.e., people who are willing to sell, whether retail investors, whales or institutions.
All cryptocurrencies, especially those with high trading volumes like Solana, depend on demand and supply dynamics to maintain their price. Low demand generally results in a price slump whereas high demand boosts it.
How Treasuries Help Solana Rally?
Treasuries infuse liquidity into Solana by purchasing from open markets, which creates demand and helps Solana to rally.
Basically, treasuries act as high demand generators due to their big purchases. Since these big purchases eliminate small suppliers in the market (by buying their SOL), they create a small demand supply gap where there is more demand but less supply. This creates a small rally.
Soon, other investors who want to sell but have been holding their SOL offer to sell to these treasuries (via market) when the token rallies to a price suitable to them. Since treasuries tend to buy in millions, these sellers are also eliminated from the markets.
The next stage is when all the small-time sellers are eliminated (who were willing to exit SOL). At this stage, there is a long-term buying demand from treasuries but most investors don’t want to sell. This situation creates a long-sustained rally in Solana.
In the past, we have seen such rallies between December 2023 and January 2025.
Solana’s Memecoin-led Demand led to a Sustained Rally Between Late 2023 and Early 2025
Capital-Driven Innovation
High price rallies in Solana tend to boost the development of the blockchain. More people trading Solana generates more revenue for the Solana Foundation which then fuels better development.
One such revenue-led development was the implementation of Alpenglow Protocol that brought near-instant finality for Solana, alleviating user experience. It is generally believed that this was possible because of the memecoin rally in late 2024 and early 2025.
What is Solana’s Alpenglow Protocol? Reducing Block Finality Time by 99%
In the future, we expect more rallies as Solana Treasuries keep buying SOL. Since treasuries do not sell their holdings easily, the stable price could help create a sustained growth for the Solana Blockchain.
Risks of Treasury-led Demand and Subsequent Rallies
Treasuries infuse decent money in cryptocurrencies via their purchases, Bitcoin being the greatest example of that. However, this kind of corporate-led investment often comes with some risks.
Firstly, treasuries do come with an agenda to make profit, and not utilize the technology. Their purchase of high volumes of cryptocurrencies allows them to influence decisions.
How Risky is a Solana Treasury vis-à-vis a Bitcoin Treasury?
Second, when these treasuries sell their holdings, which they might do during times of distress, they can easily crash the markets. Although no treasury has made any distress sale of assets since inception, we think their impact would be similar to whale dumps during the bear markets.
However, these risks can be mitigated easily.
First, Solana Treasuries’s voting power can be capped by a governance proposal in the community. Since treasuries do not overwhelmingly dominate Solana’s circulating supply, it would be easier to pass in the present and near future.
Here is a detailed list of all Solana Treasuries along with vital metrics that will help you analyze them.
Second, market ups and downs are a part of investment journey. With proper asset allocation, leveraging futures and options during crashes can easily help investors save their capital
Here are a Few Risk Management Strategies Used by Top Treasuries
