Solana (SOL) is poised for a price explosion following reports of an upcoming exchange-traded fund (ETF) tracking its native asset, 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 a series of ETF products following the successes of Bitcoin (BTC) and Ethereum (ETH). According to GSR’s report, Solana has several positive reasons to receive the blessing of the U.S. Securities and Exchange Commission (SEC).
The report begins by highlighting Solana’s rising utility and market capitalization, which have firmly placed it among the top seven cryptocurrencies. The network’s decentralization and staking features are at the core of GSR’s report on Solana’s chances of receiving approval from the securities regulator as an ETF product.
The report notes that a futures-based ETF could be within reach in the near future, but the chances of a spot ETF tracking SOL are slim. While a futures Solana ETF is expected to send asset prices up a few notches, GSR believes a spot ETF will have a major impact on SOL’s price by as much as nine times.
The market maker arrived at its hypothesis by tracking the impact of spot Bitcoin ETFs on the valuation of the largest cryptocurrency and played it safe by revealing three scenarios. In the event of a bear market, the report predicts 2% inflows into spot Solana ETFs using the value of its global investment product AUM compared to BTC.
In a base case scenario, the inflow to Solana’s investment products was tracked between 2021 and 2023 and the products were found to attract 5% of inflows compared to BTC.
GSR’s bullish forecast is more optimistic, using an average annual relative inflow of 14% to predict the potential impact of spot ETFs on Solano. To reach a conclusion, the report adjusted the relative inflow estimates for each scenario to match Bitcoin’s 2.3x increase since the launch of spot BTC ETFs.
According to the report, in a worst-case scenario, Solana will rise 1.4x in the weeks following the approval of the spot ETFs. A baseline model is expected to see the asset price rise 3.4x, while the blue sky model predicts an increase of 8.9x. However, the researchers say the estimates are conservative at best.
“In addition, there are reasons to believe that the impact could be higher than these estimates, since unlike BTC, SOL is actively used for staking and within decentralized applications and the relationship between relative flows and relative size may not be linear,” Read the report.
VanEck has since filed for a Solana-based ETF with the SEC, sending SOL prices soaring to near double digits, but skeptics warn the securities regulator could delay its response.
