ETFs
Solana ETF Could Push SOL Price to $1,300, Threatening Ether Market Position ⋆ ZyCrypto
Solana (SOL) is poised for a price explosion following reports of a new exchange-traded fund (ETF) tracking its native asset, but the approval of spot ETFs could send prices through the roof.
According to a report by crypto market maker GSR Markets, Solana is the next to receive its suite of ETF products after the success of Bitcoin (BTC) and Ethereum (ETH). According to the GSR report, Solana has several assets to receive the blessing of the United States Securities and Exchange Commission (SEC).
Right off the bat, the report highlights Solana’s growing utility and market cap that have firmly entrenched it among the top seven cryptocurrencies. The network’s decentralization and staking features are at the heart of GSR’s report on Solana’s chances of securing ETF product approval from the securities watchdog.
The report notes that a futures-based ETF could be within reach in the near future, but the chances of a spot ETF tracking SOL are slim. While a Solana futures ETF should push asset prices up a few notches, GSR estimates that a spot ETF will have profound impacts on the price of SOL by up to nine times.
The market maker reached its hypothesis by tracking the impact of Bitcoin spot ETFs on the valuation of the largest cryptocurrency, playing it safe by unveiling three scenarios. In a bearish scenario, the report predicts 2% inflows into Solana spot ETFs using the value of its global investment product AUM relative to BTC.
A base case scenario tracked inflows to Solana’s investment products between 2021 and 2023, noting that the products attracted 5% of inflows relative to BTC.
GSR’s bullish outlook is more optimistic and uses an average annual relative inflow of 14% to predict the potential impact of spot ETFs on Solano. To arrive at a conclusion, the report adjusted the relative flow estimates for each scenario to match the 2.3x increase in Bitcoin since the launch of the spot BTC ETFs.
According to the report, the worst-case scenario for the bear case will see Solana surge 1.4x in the weeks following the approval of the spot ETF. A benchmark model is projected to increase the asset’s price by 3.4x, while the blue sky model is predicting an 8.9x increase. However, the researchers say the estimates are conservative at best.
“Moreover, there is reason to believe that the impact could be higher than these estimates, since, unlike BTC, SOL is actively used for staking and in decentralized applications and that the relationship between relative flows and relative size may not be linear,” the report reads.
VanEck has since deposit with the SEC for a Solana-based ETF, sending SOL’s price into near double-digit territory. However, skeptics warn that the securities watchdog could delay responding.