July 4, 2024 at 15:41 GMTModified date: July 4, 2024 at 15:41 GMT
July 4, 2024 at 15:41 GMT

Solana ETFs: The next big move in crypto investment?

There is growing anticipation that Solana could outperform Bitcoin ($BTC) and Ethereum ($ETH) in the coming months, building on gains from Q1 2024.

Solana ETFs: The next big move in crypto investment?

Spot exchange-traded funds (ETFs) are the latest trend in the US financial market, offering institutional players a chance to gain exposure to cryptocurrency assets despite stringent regulations.

Solana ($SOL) is currently trading in the red, yet it remains one of the top-performing cryptocurrencies.

Over the past year, $SOL, the native currency of the Solana ecosystem, has increased by over 15 times.

In doing so, it has risen to the fifth position in the crypto ranking, surpassing $XRP, Cardano ($ADA), and popular meme coins like Dogecoin ($DOGE).

Looking ahead, there are signs that $SOL might see further gains. The Grayscale Solana Trust (GSOL) is trading at a 650% Net Asset Value (NAV) premium, indicating strong investor interest.

Understanding GSOL Premium

Chief Crypto Analyst at Real Vision, Jamie Coutts, noted that the NAV premium spike is linked to the wave of spot Solana ETFs in the US and Canada. 

Typically, GSOL’s NAV reflects the total value of all SOL held by the trust, divided by the number of outstanding GSOL shares. 

When GSOL trades higher than the NAV, it means people are willing to pay more for the underlying asset, $SOL, leading to a premium.

This premium is partly due to the limited supply of GSOL shares compared to the freely traded $SOL available on major exchanges like Binance and Coinbase.

Institutional investors, anticipating price increases in the coming months, might be driving this premium as they scramble to gain exposure to $SOL through GSOL.

An approval soon?

There is also growing anticipation that Solana could outperform Bitcoin ($BTC) and Ethereum ($ETH) in the coming months, building on gains from Q1 2024.

This optimism follows VanEck and 21Shares filing for spot Solana ETFs with the US Securities and Exchange Commission (SEC) in late June.

VanEck researcher, Sigel, suggests that a Solana ETF is plausible, given the positive reception of Ethereum ETF applications by the SEC. 

He believes that if Ethereum ETFs are approved, the same rationale should apply to Solana. 

Sigel also notes that Solana’s lack of a Futures Market, unlike Bitcoin and Ethereum, should not be a hindrance. 

He emphasises the need for a change in the regulatory environment, suggesting that the SEC chair plays a crucial role.

Bloomberg analyst, Eric Balchunas, shares this view as well, but remains cautious about regulatory and political challenges. 

He links the odds of a Solana ETF approval to potential changes in the US presidential administration. 

Similarly, Geoffrey Kendrick from Standard Chartered Bank forecasts a significant rise in Bitcoin’s price if President Joe Biden remains in the presidential race past 4 August.

VanEck’s research indicated a strong position for Solana in the blockchain market share race, and a Solana ETF could enhance this standing. 

The prospect of a $SOL ETF is already boosting its status among traders and investors.

Growing interest in ETFSwap

Meanwhile, Ethereum staking has seen a surge with 60,000 new depositors following the approval of Spot Ethereum ETFs. 

As investors await these ETFs to hit the market, Ethereum is poised for potential new highs. 

This bullish sentiment has also benefited ETFSwap (ETFS), an emerging Ethereum-based platform gaining traction.

ETFSwap offers unique opportunities by providing trading and investment access to the global ETF market through tokenised ETFs. 

These tokenised ETFs, backed by actual securities, promise greater investment flexibility. ETFSwap aims to address market challenges such as limited compatibility, centralised platforms, and trading hour restrictions by leveraging blockchain technology.

The platform allows users to buy ETF assets across various sectors, including healthcare, energy, commodities, and technology.

ETFSwap also promises features like fast settlements, staking and lending opportunities, lower trading costs, and decentralised trading. 

Its appeal is further boosted by the absence of KYC registration requirements, a significant barrier for crypto investors exploring ETF assets.

With growing hype and expert predictions of substantial returns, ETFSwap is positioning itself as a major player amid the excitement surrounding spot Ethereum ETFs and tokenised real-world assets.