1. The likelihood of Solana ETF approval and the driving factors behind it
In recent years, with the continuous development and maturation of the cryptocurrency market, investors' attention to various digital currencies has been increasing. Among them, Solana, as an emerging blockchain project, has attracted the attention of numerous investors due to its unique advantages and tremendous potential. Whether the Solana ETF (Exchange Traded Fund) gets approved has become a focal point of market attention. Currently, the likelihood of Solana ETF approval is continuously rising. According to data from Polymarket, the initial probability of Solana ETF approval was only 45%, however, with the changing market environment and increasing recognition of the Solana project by investors, this probability has surged to 85% as of yesterday. Although the likelihood of approval before mid-2025 is relatively moderate, for example, the probability by July is 57%, the overall optimistic sentiment is still evident.
(1) The active promotion by asset management companies
Numerous well-known asset management companies have submitted Solana ETF applications, which is undoubtedly an important force in promoting the approval of the Solana ETF. Companies such as Grayscale, VanEck, 21Shares, Bitwise, and Canary Capital are actively laying out in the Solana ETF market. These companies have extensive influence and rich resources in the financial market, and their participation can not only provide financial support for the Solana ETF but also offer professional management and operational experience. Moreover, the active actions of these companies also convey a clear signal to the market: the Solana project has tremendous potential and investment value.
In addition to these large asset management companies, some small and medium-sized companies are also actively applying for the Solana ETF. The participation of these companies will further intensify market competition and promote the prosperous development of the Solana ETF market.
(2) Relevant factors of the regulatory environment
The U.S. Securities and Exchange Commission (SEC) is about to shift from a 'law enforcement-based' to an 'information disclosure-based' regulatory model, which may reduce the difficulty of Solana ETF approval. Under the 'law enforcement-based' regulatory model, the SEC focuses more on combating and punishing violations, while providing relatively less guidance and regulation to the market. In the 'information disclosure-based' regulatory model, the SEC will focus more on guiding and regulating the market, requiring listed companies and financial institutions to fully disclose relevant information to enable investors to make informed investment decisions. This shift is a positive signal for the Solana ETF, as it means that as long as the Solana project can fully disclose relevant information and meet regulatory requirements, it is likely to obtain SEC approval.
In addition, the changes in the political landscape after the U.S. election have also positively impacted the approval of the Solana ETF. The incoming President Trump and a Congress that is more supportive of the cryptocurrency industry may adopt a more open and inclusive attitude towards the cryptocurrency market. This political environment is conducive to the approval of the Solana ETF, as government support is one of the important factors driving the listing of any financial product.
Additionally, SEC Chairman Gary Gensler will resign in January 2025. He has been strict on cryptocurrency regulation during his tenure, and his departure may lead to adjustments in regulatory policies. The new SEC chairman may adopt a more flexible and pragmatic regulatory attitude towards cryptocurrencies, creating more favorable conditions for the approval of the Solana ETF.
2. Solana ETF approval still faces challenges
Despite the increasing likelihood of Solana ETF approval, it still faces some challenges. The biggest challenge comes from the SEC classifying SOL as a security in ongoing litigation. This classification brings significant regulatory uncertainty to the approval process. The security attribute means that the Solana ETF needs to meet stricter regulatory requirements, including information disclosure and investor protection.
In terms of information disclosure, the Solana project needs to fully disclose its financial status, business model, risk factors, and other information to investors. This requires the Solana project party to have a high level of transparency and integrity, able to timely and accurately convey relevant information to investors.
In terms of investor protection, the Solana ETF needs to take a series of measures to protect the interests of investors. For example, setting reasonable investment thresholds and risk warnings to ensure that investors make investments with a full understanding of the risks; establishing a sound risk control mechanism to respond promptly to market fluctuations and risk events; strengthening investor education to improve investors' risk awareness and investment capabilities.
3. Market impacts that will arise from the approval of the Solana ETF
(1) The impact on the Solana project itself
Price aspect
The approval of the Solana ETF is expected to significantly drive the price of Solana (SOL) upwards. This is because the launch of the ETF will attract more traditional investors into the Solana market, thereby increasing demand for SOL. Traditional investors typically prefer to invest in products with stable returns and lower risks, while ETFs, as a convenient and efficient investment tool, can meet their investment needs. With the influx of traditional investors, the price of SOL is expected to rise.
In addition, the launch of the ETF will also enhance the visibility and influence of the Solana project, attracting more investors to pay attention to and participate in the Solana market. This will further increase the price of SOL. Forecasts suggest that by the second quarter of 2025, the price of SOL could reach $1000, surpassing BNB.
Ecosystem development
The approval of the Solana ETF will inspire more developers to choose Solana for application development. Currently, Solana has attracted the attention of many developers, and its high performance and low cost characteristics make it a popular platform in areas such as DeFi and NFTs. With the launch of the ETF, Solana's visibility and influence will further expand, attracting more developers to join the Solana ecosystem.
These developers will bring more innovative applications to the Solana ecosystem, promoting the prosperous development of the Solana ecosystem. For example, developers can build more DeFi applications on Solana, providing more diversified financial services; they can also build more NFT markets, promoting the development of the NFT market.
(2) Impact on the cryptocurrency market
Overall market confidence improvement
The approval of the Solana ETF will enhance investors' confidence in the entire cryptocurrency market. This will trigger more funds to flow into the cryptocurrency field, increasing market trading activity.
Moreover, the approval of the Solana ETF will also provide a reference for other cryptocurrency projects, promoting the development of the entire cryptocurrency market.
Changing the market competition landscape
The approval of the Solana ETF will intensify competition between Solana and other public chain projects like Ethereum. With the opportunities brought by the ETF, Solana will be more competitive in the market share battle.
4. Comparison with potential competitors
In the cryptocurrency market, Solana faces fierce competition from other public chain projects, such as Ethereum and Polkadot. These projects have their own advantages in terms of technological innovation, ecosystem development, and community support.
Ethereum, as one of the earliest smart contract platforms, has a broad application foundation and strong community support. Its ecosystem covers multiple fields such as DeFi, NFT, and gaming, attracting the attention of many developers and investors.
Polkadot adopts a unique cross-chain technology to achieve interoperability between different blockchains. Its ecosystem is rapidly developing, attracting many projects and investors' attention.
Compared to these competitors, Solana has unique advantages. First, Solana features high performance and low costs, able to meet the needs of large-scale applications. Secondly, the Solana ecosystem is rapidly developing, attracting many developers and investors' attention. Finally, Solana has received support and applications from several well-known asset management companies, providing a strong impetus for its development.
5. Impact on the traditional financial market
Asset allocation diversification
The approval of the Solana ETF provides traditional investors with a new asset allocation option. Traditional investors can indirectly invest in the Solana project by purchasing the Solana ETF, thus achieving diversified asset allocation.
Furthermore, the launch of the Solana ETF will also promote the integration of traditional finance with the cryptocurrency market. Traditional financial institutions can leverage the Solana ETF to enter the cryptocurrency market, providing investors with more diversified investment options.
Shift in regulatory focus
The approval of the Solana ETF is expected to draw more regulatory attention to the risks arising from the interaction between cryptocurrencies and traditional financial markets. For example, regulatory agencies need to guard against risks such as money laundering and market manipulation to ensure market stability and fairness.
Additionally, regulatory agencies need to improve regulatory policies to protect investors' interests. For example, formulating stricter investor protection policies, strengthening market regulation and standardization, etc.
In summary, the approval of the Solana ETF is full of variables, but if approved, it will have far-reaching impacts on the Solana project itself, the cryptocurrency market, and the traditional financial market. Investors should closely monitor market dynamics and policy changes to make informed investment decisions.$SOL