Solana
Here’s How Much SOL Could Rise If Solana ETFs Were Approved
A new report predicts a significant price increase for Solana if a Solana SOL/USD Exchange Traded Fund (ETF) Approved.
THE reportaccording to market maker GSR, suggests that under a Trump administration, regulatory changes could pave the way for a Solana ETF, leading to substantial inflows and a corresponding increase in the price of SOL.
Making the Case for a Solana ETF
With Bitcoin BTC/USD and Ethereum With ETH/USD having or about to get spot ETFs, GSR says Solana is likely to follow suit.
Jamie Coutts GSR’s report highlights the changing regulatory environment, particularly with Donald Trump’s newfound support for the crypto industry.
This change has already led to bipartisan legislative actions such as overturning the SEC’s decision. SAB 121 Cryptographic Accounting Policy and the FIT21 “crypto invoice”.
Coutts says, “Not only is such a scenario possible, it may even be probable,” indicating that a Trump administration and a supportive SEC could make it easier to approve a Solana ETF.
Price Impact Comparison: Solana vs. Bitcoin
The GSR report highlights the potential impact of a Solana ETF on the price of SOL by comparing it to the experience of Bitcoin. Following the approval of spot Bitcoin ETFs, the price of Bitcoin rose from $27,000 to around $63,000, a 2.3x increase.
GSR uses this as a baseline to estimate the potential price upside for Solana.
Given Solana’s lower market cap compared to Bitcoin, the report adjusts potential inflows accordingly and outlines three scenarios:
- Bear Scenario: Solana’s global investment product AUM is 2% of Bitcoin’s, driving a 1.4x price increase.
- Basic scenario: Solana’s investment products received 5% of cumulative inflows compared to Bitcoin, suggesting a 3.4x price increase.
- Blue sky scenario: Over the past two years, Solana’s relative flows have been 31% and 9% of Bitcoin’s, respectively, indicating an 8.9x price increase in this scenario.
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Key indicators and analyzes
The report assesses Solana’s decentralization and demand, crucial factors for ETF approval. Solana scores highly on decentralization metrics, including Nakamoto coefficient, staking requirements, and governance scores.
In terms of demand, Solana’s strong market metrics, active community, and large market cap position it well.
“While a Solana spot ETF could see inflows as a percentage of Bitcoin’s 2.3x increase due to spot ETFs, we now need to adjust the impact a spot ETF can have on SOL for its smaller size,” the report said.
With Solana’s market cap averaging just 4% of Bitcoin’s over the past year, GSR predicts that Solana could increase 1.4x in a bear case scenario, 3.4x in a base case, and 8.9x in a blue sky scenario.
For more information on the future of digital assets and the potential impact of regulatory changes, industry players can look forward to speaking from Benzinga. The future of digital assets event on November 19, where these topics will be explored in detail.
Read next: VanEck files for Solana ETF, SOL rebounds 6%
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