Solana
Ethereum ETFs Are Advancing, But Solana Could Turn Things Bearish Instead – How?
- New data indicates that the probability of approval of Ethereum ETFs was relatively high.
- Ethereum lost market share to Solana, but the price of ETH continued to rise.
Ethereum [ETH] has been under a lot of heat due to growing speculation around the rejection of Ethereum ETF approval.
Uncertainty around ETFs
While there is uncertainty about timely approval due to the SEC’s silence, it is a question of when, not if, a US spot ETH ETF will be approved, according to Coinbase data.
However, potential justifications for disapproval may stem from differences between Ethereum and Bitcoin [BTC]particularly Ethereum’s proof-of-stake mechanism.
There is a lack of clear regulatory guidance on asset staking, making it unlikely that ETH spot ETFs will soon be approved for staking. Despite this, it is believed that unstaked ETH should not be affected.
There is potential for positive surprise in the approval decision, with probabilities estimated at around 30-40%.
Given the emergence of crypto as an election issue, the SEC may be reluctant to deny approval, and litigation could overturn a rejection.
Additionally, not all one-time applications for ETH ETFs need to be approved simultaneously, as noted in Commissioner Uyeda’s statement regarding the one-time approval of the BTC ETF.
Strong competition
Even if the possibility of Ethereum ETFs being approved was high, the Ethereum network would face other challenges. Especially competition from other layer 1 chains.
In terms of adoption, the emergence of highly scalable integrated chains, including Solana [SOL]appears to have an impact on Ethereum’s dominance.
With its ability to handle large numbers of transactions at low fees, Solana has moved trading activity off the Ethereum mainnet.
Over the past year, the Solana ecosystem has seen remarkable growth, increasing its share of decentralized exchange (DEX) volume from just 2% to 21%.
Source: Coinbase
Additionally, the growing popularity of memecoins on the Solana network is also driving users away from Ethereum and towards Solana.
Read Ethereum [ETH] Price prediction 2024-25
Despite these factors, the price of ETH has seen positive developments. At press time, ETH was trading at $3,117.82, the result of a 2.11% appreciation over the past 24 hours.
Even as the price of ETH increased, its network growth declined, indicating a decline in interest from new users.
Source: Santiment