- GSR Markets predicts Solana’s price could increase up to nine times with U.S. approval of a spot Solana ETF.
- The firm’s optimistic scenario is based on the ETF capturing 14% of the investment flows of existing Bitcoin ETFs.
- Regulatory challenges remain significant, with changes in U.S. leadership seen as necessary for approval.
Solana’s potential for significant price increases hinges on the approval of a spot exchange-traded fund (ETF) in the United States, according to an analysis by crypto market maker GSR Markets. The firm, holding a long position in Solana (SOL), outlined several scenarios where the price of SOL could see dramatic increases depending on the share of market cap it captures relative to established cryptocurrency ETFs.
On June 27, the same day VanEck announced its filing for a spot Solana ETF, GSR Markets released its findings, suggesting a bullish outcome for Solana. The report posits that if Solana ETFs can attract 14% of the investment flows that Bitcoin ETFs have received since their inception, Solana’s price could soar from its current $149 to over $1,320.
Financial Scenarios and Regulatory Hurdles
The analysis from GSR Markets also set out less optimistic scenarios, where Solana ETFs might only attract 2% to 5% of the investment flows seen by Bitcoin, potentially resulting in price increases of 1.4 times to 3.4 times, respectively. These projections consider the possibility of including income from staking rewards in the ETFs, which could further enhance returns, although this was not permitted in the Ether ETFs recently approved in the U.S.
The pathway to approval for a Solana spot ETF faces considerable challenges. Regulatory hurdles are significant, particularly with the Securities and Exchange Commission (SEC) and its Chair, Gary Gensler, who have classified SOL as a security in legal actions against major exchanges. This classification complicates the approval process, contrasting with the relatively smoother paths Bitcoin and Ether ETFs have experienced.
Looking Forward: Solana’s Market Position and Outlook
Despite the regulatory barriers, the interest in Solana as a viable candidate for a spot ETF remains high, buoyed by its technological strengths and growing ecosystem. Notably, Franklin Templeton, a major asset management firm, has praised the Solana network, although it has not confirmed plans to pursue a Solana ETF. Currently, over $1 billion worth of Solana-related exchange-traded products are available globally, underscoring the widespread interest and investment already present in the market.
