BlackRock is reportedly set to apply for an exchange-traded fund (ETF) on Solana ($SOL) next month in a move that could significantly impact the cryptocurrency and blockchain ecosystem.
After applying for Bitcoin ($BTC) and Ethereum ($ETH) ETFs, Solana is now the next candidate in the United States. Despite facing several challenges recently, the fifth-largest cryptocurrency by market capitalisation, is performing well overall.
At the time of writing, $SOL was changing hands for $159.36. The altcoin has gained popularity due to its high-speed blockchain and reduced transaction costs, appealing to developers and investors alike.
BlackRock has shown increasing interest in cryptocurrencies, and this potential application has generated substantial market buzz. An ETF on Solana would be another step towards mainstream cryptocurrency adoption, diversifying offerings, and attracting a broader investor audience.
An ETF on Solana by BlackRock could boost the cryptocurrency’s legitimacy, stimulating further investments and development within its ecosystem.
This move could signify a significant turning point for the cryptocurrency market, underscoring the sector’s growing importance in the global financial landscape.
Complications expected
Applying for a Solana ETF is more complicated compared to Bitcoin and Ethereum. These two coins have dominated the digital currency space for the past seven years, with no other cryptocurrency challenging their supremacy.
Solana, however, is relatively new, emerging as a major success story from the 2020-2021 bull market. After losing 96% of its value post-2021, $SOL has since recovered and is poised for a potential bull run during the anticipated 2024-2025 bullish phase.
An approved Solana ETF could lead to a surge in similar requests from smaller crypto projects, complicating the US Securities and Exchange Commission’s (SEC) job.
Bloomberg crypto analyst, Eric Balchunas, has suggested a spot Solana ETF may be delayed until the US elections in November. A favourable election outcome might potentially create a more favourable situation for the launch.
Bitcoin ETF surpasses 300,000 $BTC in AUM
Meanwhile, BlackRock’s Bitcoin ETF has surpassed 300,000 $BTC (worth $21 billion) in assets under management (AuM), five months after its trading began on 11 January.
The ETF now holds 302,534 $BTC, with net inflows of about 4,920 $BTC yesterday pushing it past this milestone. BlackRock’s IBIT has surpassed Grayscale’s GBTC in assets under management (AUM), capturing the lead among spot Bitcoin ETFs.
GBTC transitioned from a private placement fund to public trading on the OTC market in 2015, converting to an ETF in January. GBTC charges a higher fee (1.5%) compared to IBIT’s 0.25%.
Post-conversion, GBTC’s Bitcoin holdings decreased by 54% from 619,220 $BTC to 285,651 $BTC. However, due to the concurrent increase in Bitcoin’s price since the launch of spot ETFs, GBTC’s AUM in US dollars has decreased by 30%, from $28.7 billion on January 11 to $20 billion currently.
Data from CoinGlass indicates that US spot Bitcoin ETFs now collectively hold nearly 883,000 $BTC ($63 billion), representing 4.2% of the total 21 million Bitcoin supply.
Recently, US spot Bitcoin ETFs recorded 18 consecutive days of net inflows, adding another $217.7 million to the funds. This week saw nearly $1.7 billion in net inflows.
BlackRock’s IBIT led yesterday’s net inflows with $349.9 million, while Grayscale’s GBTC recorded net outflows of $37.6 million.
Despite daily inflows reaching record levels this week, trading volume remains significantly lower than the peak of $9.9 billion on March 12, generating $1.4 billion in trades.
