After the dust settled on the Bitcoin and Ethereum spot ETFs, Solana became the next ETF that funds favored and hyped, especially the fact that multiple issuers have successively applied for Solana ETFs, which increased market confidence. Strong fundamentals, large-scale institutional holdings, and the US election have further boosted the market's optimism about Solana. This article will explain the main reasons why Solana has outperformed the market recently.
It leads Ethereum in many data and has been increased by many institutions
In recent times, Solana's market performance has been relatively strong and has gained the favor of more institutions.
Price information often has an important impact on user confidence and market expectations. According to CoinGecko data, the price of SOL has recently hit a three-month high, and in the past 30 days, it has increased by about 31.1% and surpassed a number of crypto assets such as Bitcoin and Ethereum.
At the same time, Artemis data shows that in the past month, Solana's daily trading volume has increased by 40.5% to US$43.7 million; the number of daily active addresses has increased by 75% to 2.1 million, mainly from wallets, MEME and cross-chain bridge sectors, and the number of new user addresses accounts for a higher proportion; TVL rose to US$5.2 billion, an increase of about 26.9%; daily transaction fees increased by more than 33.3% to US$2 million, and daily revenue also increased by more than 33.1%, with wallets, DeFi and MEV as the main contributing sectors.
In addition, Ryan Connor, a researcher at Blockworks Research, said in a recent article on the X platform that Solana has surpassed Ethereum for the first time in decentralized exchange (DEX) trading volume in the past 30 days and is now the most used chain by this standard.
According to the Coin98 Analytics report, Solana's fees and revenues have grown significantly in the second quarter of this year, generating more than $26 million in revenue, a year-on-year increase of more than 42 times; SOL's total transaction volume reached $292 billion, a nearly 7-fold increase over the same period last year. And Dne data shows that Solana's liquidity pledge rate rose to 6.58%, a 1.76% increase from Q2, and the dominance of the top three suppliers fell from 93% to 68.7%, showing a healthier and more diversified market.
With Solana's strong fundamentals, many institutions have recently begun to publicly increase their holdings of Solana. For example, Canadian fintech company DeFi Technologies announced that it would add Solana to its digital asset reserves and already holds 12,775 Solana (about $2.03 million); Canadian listed investment company Cypherpunk has significantly increased its holdings of SOL, with holdings exceeding 63,000, and also announced that it will run its own Solana validator and use its own Solana node to stake 49,917 tokens (worth about $11 million).
"This is not something you see every day. We are now dealing with growing investor interest in Solana, one of the most actively traded cryptocurrencies after Bitcoin and Ethereum," said Cboe's global head of ETP listings in a comment on the Solana ETF 19b-4 application. Rennick Palley, founding partner of crypto venture capital fund Stratos, also said, "The relaxation of U.S. regulatory policies is increasing SOL's appeal among professional investors."
Multiple issuers submit Solana ETF applications, political winds bring uncertainty
With Solana's outstanding market performance, the Solana spot ETF application is considered one of the important catalysts, and it is also one of the ETF varieties with the highest demand and greatest probability.
On June 27, VanEck announced that it had submitted an application for the Solana Trust "VanEck Solana Trust" to the U.S. SEC, which is also the first Solana ETF applied for in the United States. If approved, the ETF will be listed on the Cboe BZX Exchange. 21Shares also followed suit and joined the application boom, submitting the S-1 document of the Solana spot ETF to the SEC, and plans to trade the 21Shares Core Solana ETF on the Cboe BZX Exchange. The digital asset management company 3iQ also recently launched an application for the Solana ETF in Canada, planning to use the code $QSOL for listing, which is also the first Solana ETF application in North America.
At the same time, Franklin Templeton also recently expressed his optimism about Solana, "In addition to Bitcoin and Ethereum, we believe there are other exciting major developments that will drive the development of the encryption field. Solana has shown a wide range of applications and is constantly maturing, overcoming the pains of technological growth and highlighting the potential of high-throughput monolithic architecture." And Nate Geraci, president of The ETF Store, also recently revealed that in the next few months, an ETF issuer will apply to issue a combined spot ETF of Bitcoin, Ethereum and SOL.
VanEck, 21Shares and Franklin Templeton are all issuers of Bitcoin and Ethereum spot ETFs in the United States. Their participation and voice have undoubtedly increased the outside world's optimistic expectations for Solana spot ETFs. At present, Cboe has submitted VanEck and 21Shares' Solana ETF 19b-4 forms to the US SEC. "Once the SEC confirms these documents, the decision clock will start to tick." Nate Geraci commented on this.
As market sentiment is ignited, the political landscape changes under the US election have further increased the possibility of Solana spot ETF approval. In fact, as the probability of US Republican candidate Trump's election increases, the possibility of SEC Chairman Gary Gensler, a radical regulator, being considered "out of office" has soared. Markus Thielen, founder of 10x Research, even predicted that although Gensler's term will end on June 5, 2026, he is likely to resign at the end of President Biden's term in January or February 2025. Prior to this, the SEC had repeatedly characterized SOL as an unregistered security, which made its road to approval more difficult.
"If SEC Chairman Gary Gensler is no longer chairman after the 2024 presidential election, the likelihood of approval of the Solana ETF will increase." Matt Sigel said that crypto voters may play a key role in the election, and the regulatory environment in Washington is moving in a direction that supports cryptocurrencies. And the previous path of Bitcoin and Ethereum from futures to spot fund listings was nothing more than Gensler's psychological tactics. Bloomberg ETF analyst James Seyffart also pointed out that the final deadline for the Solana ETF is mid-March 2025. But during this period, the most important date is November. Only if there is a new management in the White House and the SEC, there is a chance to launch it sometime in 2025.
However, SBF, the founder of FTX, which was once closely associated with Solana, is a "financial sponsor" of the Democratic Party and one of the largest donors to the current US President Biden. The impact of political trends on Solana is still unclear. It should be noted that Solana founder Toly (Anatoly Yakovenko) has not made his political stance public.
Judging from the inflow of funds approved for Bitcoin spot ETFs, if Solana officially joins the ETF craze, it will have a direct stimulating effect on prices. According to the prediction of well-known crypto market maker GSR Markets, if the United States launches Solana spot ETF, if its fund inflow accounts for 2%, 5% and 14% of Bitcoin inflow in bear market, benchmark and ideal conditions respectively, and Solana's market value accounts for an average of 4% of Bitcoin's market value in the past year, then SOL may increase by 1.4 times in a bear market, 3.4 times in a benchmark condition, and 8.9 times in an ideal condition.
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