SOL Price Could Increase by 9x after Spot Solana ETFs Approval, Predicts GSR Markets

The approval of spot Solana exchange-traded funds (ETFs) in the United States has the potential to drive the price of SOL up 9x, according to crypto market maker GSR Markets.

In a recent report released on June 27, GSR Markets identified Solana as one of “crypto’s big three” and examined the likelihood of Solana becoming the next spot cryptocurrency ETF to receive regulatory approval in the US.

The report coincided with VanEck’s filing to launch a spot Solana ETF, which took many by surprise.

Spot Solana ETFs Could Attract 14% of Bitcoin ETF Flows

GSR, which holds a long position on SOL, arrived at an estimate of “8.9x” based on the assumption that spot Solana ETFs would capture 14% of the flows witnessed by spot Bitcoin ETFs since their launch in January, taking into account their relative market capitalization.

The optimistic scenario outlined by GSR would propel Solana’s current price of $149 to over $1,320, resulting in a market capitalization of $614 billion based on the current supply.

However, GSR also presented more conservative scenarios.

In the “bear” and “baseline” scenarios, the spot Solana ETFs would capture 2% and 5% of Bitcoin’s flows, leading to respective price increases of 1.4x and 3.4x for Solana.

GSR emphasized that these estimates could be even higher if the spot Solana ETFs incorporate income from staking rewards, although staking was not allowed in the approved spot Ether ETFs.

While GSR remains optimistic, Bloomberg ETF analyst Eric Balchunas and others believe that a change in the US presidency and the chairmanship of the Securities Exchange Commission would be necessary for serious consideration of a spot Solana ETF.

The knee jerk reaction here is 'oh this will never be approved bc there aren't Solana futures' agree but.. if change at POTUS i think anything poss. Just imagine Hester Peirce (or someone like that) running the SEC..

— Eric Balchunas (@EricBalchunas) June 27, 2024

The SEC, under the leadership of Chair Gary Gensler, has classified the SOL token as a security in lawsuits against Binance and Coinbase, which could make the path to approval more challenging compared to the already approved spot Bitcoin and Ether ETFs.

VanEck’s recent application for a spot Solana ETF comes on the heels of cryptocurrency asset manager 3iQ’s filing for the same in Canada, marking a first in North America.

The Solana ecosystem and network have garnered praise from Franklin Templeton, a $1.5 trillion asset manager.

However, the firm has not confirmed whether it intends to launch a spot Solana ETF in the future.

Currently, over $1 billion worth of Solana exchange-traded products are already available worldwide, indicating a growing demand for exposure to the SOL token and the Solana network.

Ethereum ETF Approval Was Political

Bloomberg ETF analyst James Seyffart believes the approval of spot Ethereum ETFs was likely influenced by political decisions rather than purely financial considerations.

In a recent interview, Seyffart suggested that the political climate, including actions by the Biden administration and responses from the crypto community, played a significant role in the approval to go through.

Beyond Bitcoin and Ethereum, the approval of other crypto ETFs, including Solana, is unlikely without significant regulatory changes, Seyffart said.

He noted that a regulated market is needed to monitor these assets for fraud and manipulation.