ETFs
Solana ETFs and Huge SOL Get Real Possibility Under Trump, GSR Says
Under the Biden administration, Solana (GROUND) seems far from being close to getting its own ETF in the United States. But, according to market-making firm GSR, if Donald Trump takes back the White House, it could be closer than many observers think and, in terms of price, it would have far more advantages than bitcoin. (BTC) did so when its spot ETF debuted.
The US presidential election could provide a breakthrough for additional crypto ETFs like SOL, according to the research note shared with CoinDesk. If Trump becomes president again, he could upend the established playbook for launching crypto ETFs, which typically takes years and begins with the introduction of federally regulated futures contracts — something Solana lacks.
“It may even be likely” that his notional administration will implement permissive digital asset regulations that allow the launch of a “myriad of spot digital asset ETFs,” the memo said. If that happened, SOL, one of the biggest crypto assets behind ether BTC and Ethereum (ETH) (who already have American ETFs), could be the first to benefit.
“Solana is prepared to create a spot ETF if and when additional spot digital asset ETFs are permitted in the United States, and the price impact may well be the largest to date,” the note said of the market maker.
Solana is one of the few crypto assets enjoying strong market demand and whose network also has a high degree of decentralization, according to GSR’s internal calculations. The market maker said these attributes should guide the willingness of potential ETF issuers to pursue a listing.
Bitcoin’s price more than doubled in the months leading up to and following the launch of its spot ETF, GSR said. If SOL sees just 5% of the inflows that BTC did, its price could more than triple. GSR considered this inflow rate a “base case,” as Solana investment products saw 5% of bitcoin inflows between 2021 and the end of 2023, before crypto ETF fever took hold.
Blue sky entry rates of 14% could see Solana’s price increase ninefold, according to the GSR note. The numbers are only a fraction of those for Bitcoin, but given Solana’s small size, the potential for price action is much greater.
There is no ETF price action for Solana without a Solana ETF. And the asset didn’t check the all-important box of having traded for years on a federally regulated futures market, as did Bitcoin and Ether (which are expected to soon get their own AND F). This means it will be years before launch under the current playbook.
“All you really need is for Donald Trump to become president and then you will be subject to whatever he wants to do,” said GSR senior strategist Brian Rudick, who wrote the memo.
If Trump wins the election and delivers on his cryptocurrency campaign promises, he could make the necessary changes so that SOL has a near-term chance of becoming an ETF.
But that’s a big if. And the market hasn’t exactly signaled its embrace of that “if,” if a niche metric for tracking the likelihood of various crypto ETFs launching, Grayscale’s Crypto Trust Products Price Spread, is referenced .
“If there were a greater chance of a SOL ETF collapsing, what you would see is the price of the Grayscale Solana Trust (GSOL) collapsing,” he said.
At press time, GSOL was trading at a roughly 750% premium to net asset value, a staggering spread that Rudick said would collapse if Grayscale converted it to an ETF, as was the case for its Grayscale Bitcoin Trust (GBTC) when it became an ETF.
Rudick cautioned that the comparison isn’t ironclad because GSOL doesn’t have much liquidity, meaning its holders don’t have too many buyers willing to dump their overvalued trust shares.