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Lisa Cantin
Lisa Cantin

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Spot Solana ETFs Could Propel SOL Price to New Heights

The cryptocurrency market has been eagerly anticipating the potential approval of a spot Solana exchange-traded fund (ETF) in the United States, and a recent analysis by market maker GSR Markets suggests that such an event could have a profound impact on the price of the SOL token.

According to GSR's report, spot Solana ETFs in the U.S. could potentially drive up the price of SOL by as much as 9 times its current level. This estimate is based on the firm's analysis of the impact that spot Bitcoin ETFs have had on the price of BTC since their launch in January 2024.

GSR, which holds a long position in SOL, arrived at the "8.9x" figure by assuming that the spot Solana ETFs would capture around 14% of the inflows that the spot Bitcoin ETFs have seen. This projection is based on the relative market capitalization of Bitcoin and Solana.

In GSR's "blue sky scenario," this would take Solana's current price of $149 to over $1,320, while also increasing Solana's market capitalization to $614 billion (at the current supply). Even in the firm's more conservative "bear" and "baseline" scenarios, the spot Solana ETFs could still trigger price increases of 1.4x and 3.4x, respectively.

The potential impact of spot Solana ETFs is further amplified by the unique characteristics of the Solana network. Unlike Bitcoin, Solana is actively used for staking and decentralized applications, which could create a "free option" for investors by reflecting significant upside potential relative to current market conditions.

However, the path to a spot Solana ETF approval in the U.S. is not without its challenges. The Securities and Exchange Commission (SEC) and its chair, Gary Gensler, have labeled SOL as a security in their lawsuits against Binance and Coinbase, which could make the regulatory approval process more difficult compared to the now-approved spot Bitcoin and Ether ETFs.

Additionally, some analysts, such as Bloomberg ETF expert Eric Balchunas, believe that a change in the U.S. presidency and the SEC chair may be necessary for a spot Solana ETF to be seriously considered.

Despite these hurdles, the Solana ecosystem has continued to see a resurgence in 2024, with the network receiving praise from major institutional investors like Franklin Templeton. The recent filing of a spot Solana ETF in Canada by cryptocurrency asset manager 3iQ also marks a significant milestone for the Solana ecosystem.

As the crypto industry eagerly awaits further regulatory developments, the potential approval of a spot Solana ETF in the U.S. could be a game-changer for the SOL token and the broader Solana ecosystem. The possibility of a 9x price surge, as suggested by GSR Markets, underscores the significant upside potential that such an event could unlock for Solana and its investors.

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