Solana (SOL) is set for a price boom following reports of an exchange-traded fund (ETF) coming soon, but the approval of spot ETFs could send prices soaring.
According to a report by crypto market maker GSR Markets, Solana is next in line to receive multiple ETF products following the success of Bitcoin (BTC) and Ethereum (ETH).
As reported by GSR, Solana has several positives to receive approval from the US Securities and Exchange Commission (SEC).
From the outset, the report highlighted Solana's growing utility and market capitalization, making it part of the seven largest cryptocurrencies.
The network's decentralized and staking functions form the core 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 may be within reach in the near future but the chances of SOL tracking a spot ETF are slim.
While Solana ETF futures are expected to increase the asset's price by several notches, GSR believes that the spot ETF will have a profound impact on the price of SOL by up to nine times.
The market maker arrived at his hypothesis by tracking the impact of a spot Bitcoin ETF on the valuation of the largest cryptocurrency, playing it safe by revealing three scenarios.
In a bearish case, the report predicts inflows to the Solana spot ETF of 2% using the AUM value of its global investment product relative to BTC.
A baseline scenario tracked capital inflows into Solana investment products from 2021 to 2023, noting that these products attracted 5% inflows relative to BTC.
GSR's blue sky outlook is more optimistic and uses average annual relative inflows of 14% to predict the potential impact of spot ETFs on Solano.
To conclude, the report adjusted the relative flow estimates for each scenario to accommodate Bitcoin's 2.3x increase since the launch of spot BTC ETFs.
According to the report, the worst-case bear case scenario would see Solana increase 1.4x in the weeks following the spot ETF approval.
The base model is expected to boost the asset price by 3.4 times, while the blue sky model predicts an increase of 8.9 times. However, researchers say this estimate is conservative.
“ Furthermore, there are reasons 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 relationships between relative flow and relative size may not be linear,” read the report.
VanEck has filed an application with the SEC for a Solana-based ETF, causing SOL's price to nearly double. However, skeptics warn that the securities watchdog could delay issuing a response.
