Growth Potential of Solana
Solana has significant growth potential with the launch of a spot ETF based on the SOL token. Analysts from GSR, one of the largest crypto market makers, evaluated Solana’s prospects in this scenario. They compared it to the effect of a similar Bitcoin ETF.
Bitcoin ETF Comparison
Experts drew parallels between the Bitcoin ETF launch and a potential Solana ETF. In January, the Bitcoin ETF launch in the U.S. sparked a surge in interest. From October of the previous year, Bitcoin’s price doubled from $27,000 to $63,000 by the end of June 2024. Analysts believe a similar scenario could occur with Solana following its ETF launch.
Three Scenarios for Solana
GSR analysts outlined three scenarios for Solana’s price increase:
- Bearish Scenario: SOL price increases by 1.4 times.
- Baseline Scenario: SOL price increases by 3.4 times.
- Blue Sky Scenario: SOL price increases by 8.9 times.
These scenarios are based on capital inflows into existing Solana investment products, compared to similar Bitcoin products from 2021 to 2023 before spot ETFs existed in the U.S.
Capital Inflow Estimates
- Bearish Scenario: Solana products receive 2% of Bitcoin product capital.
- Baseline Scenario: Solana products receive 5% of Bitcoin product capital.
- Blue Sky Scenario: Solana products receive 14% of Bitcoin product capital, considering peak Bitcoin market inflows in 2021 and the current presence of spot Bitcoin ETFs.
Analysts’ Outlook
Analysts doubt Solana can match Bitcoin’s performance. However, the ETF launch impact might be stronger for Solana, as SOL is actively used for staking in decentralized finance applications.
Recent Developments
Solana’s price rose 6.6% after VanEck filed for a Solana spot ETF named VanEck Solana Trust with the U.S. SEC. VanEck will buy SOL tokens to back the ETF shares. VanEck also launched a Bitcoin spot ETF, managing $600 million in Bitcoin.
Trump’s Influence
The crypto industry sees shifts with new support from Donald Trump. This has pushed Democrats to soften their stance on digital assets during a tense election campaign, according to GSR analysts. Although the current U.S. legislative and regulatory bodies are unlikely to approve diverse spot ETFs for digital assets, Trump’s administration and a crypto-friendly SEC commissioner could reclassify cryptocurrencies, recognizing them as securities and exchange-traded commodities.
