VanEck recently submitted an application for the first spot Solana Exchange-Traded Fund (ETF) in the US, generating a buzz among investors and analysts. GSR, a leading market maker, has issued a comprehensive analysis titled “Is Solana Next?” forecasting a remarkable potential surge in SOL’s price, potentially up to nine times its current value, given the right circumstances.
Prospects of Spot Solana ETF Approval
Solana, conceived by visionaries Anatoly Yakovenko and Raj Gokal in 2018 and officially launched in 2020, is a cutting-edge blockchain framework designed for high throughput and scalability. Known for its low transaction costs and wide array of decentralized applications (dApps), over 300 billion transactions have been facilitated on Solana, securing a total value locked of over $4 billion.
The blockchain’s recent progress, including significant token launches and project migrations, has solidified its position in the market. The GSR report notes, “Solana’s continuous advancement through high-profile initiatives and technological innovations caters to a diverse range of blockchain applications,” highlighting its robust growth trajectory.
However, the approval of a spot ETF largely depends on the evolving regulatory landscape. Current US regulations mandate a federally-regulated futures market for any cryptocurrency being considered for an ETF, a criterion currently met only by Bitcoin and Ethereum.
Nonetheless, GSR hints at a potential shift in regulatory attitudes, influenced by political and public sector changes. “Recent bipartisan backing and legislative adjustments indicate a warming stance towards digital assets, raising the possibility of accommodating new crypto ETFs,” suggests GSR, signaling a potential shift that could benefit SOL.
The GSR analysis delves into the prerequisites and implications of a potential spot ETF, identifying crucial factors that could impact its approval and success, including the level of decentralization within the blockchain and the demand for investment products based on Solana.
The report’s “Decentralization Analysis” highlights metrics like the Nakamoto Coefficient, staking requirements, and governance ratings as key indicators. Solana scores well on these measures, leading GSR to conclude that the cryptocurrency possesses a “robust decentralization profile that may position it favorably in regulatory assessments.”
Regarding demand, GSR evaluates market capitalization, trading volumes, and the performance of existing investment products to gauge the potential interest. “The strong market indicators and substantial existing product assets under management suggest a promising demand for a Solana spot ETF,” explains the report.
Predictions for SOL Price
GSR’s report places significant emphasis on the price impact analysis, presenting various scenarios in which SOL’s price could surge. Three scenarios are outlined – bear, base, and blue sky – estimating the inflows into a Solana ETF relative to those witnessed by Bitcoin’s ETFs.
Bear Case Scenario: Assuming Solana captures a minimal market share equivalent to 2% of Bitcoin’s ETF inflows, GSR predicts a potential 1.4x increase in Solana’s price, even under conservative assumptions.
Base Case Scenario: With expectations of inflows amounting to 5% of Bitcoin’s based on recent data, SOL is anticipated to triple in value, offering a 3.4x price increase in a more balanced scenario.
Blue Sky Scenario: In an optimistic scenario where Solana captures up to 14% of Bitcoin’s inflows based on exceptional performance, SOL’s price could surge close to 9x, reflecting its high utility and expanding market presence.
As of the latest update, SOL was trading at $144.
