Solana (SOL) is poised for a price explosion following reports of a new exchange-traded fund (ETF) tracking its native asset, but the approval of spot ETFs could send prices higher across the roof.
According to a report from crypto market maker GSR Markets, Solana is next in line to receive its ETF product lineup following the successes of Bitcoin (BTC) and Ethereum (ETH). According to the GSR report, Solana has several advantages 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 cap that have firmly anchored it among the top 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 within reach in the near future, but the chances of a spot ETF following SOL are slim. While a Solana futures ETF is expected to push asset prices up a few notches, GSR estimates that a spot ETF will have a profound impact on the price of SOL 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 fund inflows into Solana’s investment products between 2021 and 2023, noting that the products attracted 5% of inflows compared to BTC.
GSR's Blue Sky Outlook is more optimistic and uses an average annual relative inflow of 14% to predict the potential impact of spot ETFs on Solano. To arrive at a conclusion, the report adjusted the relative flow estimates for each scenario to match the 2.3x increase in Bitcoin since the launch of spot BTC ETFs.
According to the report, the worst-case scenario in the bear case will see Solana surge 1.4x in the weeks following the approval of spot ETFs. A benchmark model is expected to increase the asset price by 3.4x, while the blue sky model predicts an increase of 8.9x. 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.#solana $SOL
VanEck has since filed an ETF based on Solana with the SEC, sending the price of SOL on a near double-digit rise. However, skeptics warn that the securities watchdog could delay the response.
