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Solana ETF Could Push SOL Price to $1,300, Threatening Ether Market Position ⋆ ZyCrypto
Solana (SOL) is set for a price explosion following reports of an exchange-traded fund (ETF) tracking its native asset, but the approval of spot ETFs could send prices skyrocketing.
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 capitalization that have firmly anchored it among the seven largest cryptocurrencies. The network’s decentralization and staking features make up the bulk of GSR’s report on Solana’s chances of receiving ETF product approval from the securities watchdog.
The report notes that a futures-based ETF could be in the offing in the near future, but the chances of a spot ETF tracking SOL are slim. While a Solana futures ETF should send asset prices up a few notches, GSR estimates that a spot ETF would have a profound impact on SOL’s price by up to nine times.
The market maker reached his hypothesis by tracking the impact of spot Bitcoin ETFs on the valuation of the largest cryptocurrency, playing it safe by unveiling three scenarios. In a bearish scenario, the report predicts inflows of 2% 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 Blue Sky Outlook is more optimistic, using an average annual relative inflow of 14% to predict the potential impact of spot ETFs on Solano. To arrive at its conclusion, the report adjusted the relative inflow estimates for each scenario to match the 2.3x increase in Bitcoin since the launch of BTC spot ETFs.
According to the report, the worst possible scenario under a bearish scenario will see Solana’s price rise 1.4 times in the weeks following the approval of the spot ETFs. A basic model is expected to cause the asset’s price to rise 3.4 times, while the blue sky model predicts an increase of 8.9 times. However, researchers say the estimates are conservative at best.
“Furthermore, there is reason to believe that the impact could be greater than these estimates, because unlike BTC, SOL is actively used for staking and in decentralized applications and that the relationship between relative flows and size relative may not be linear,” the statement read. report.
VanEck has since deposit with the SEC for a Solana-based ETF, sending the price of SOL on a near double-digit surge. However, skeptics warn that the securities watchdog could delay the response.