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The impending approval of the Solana spot ETF could increase the price of this token by 9 times
Solana (SOL), the world’s fifth largest cryptocurrency by market cap, has attracted the attention of many companies due to its low transaction fees and ability to handle large volumes of transactions efficiently. This has contributed greatly to its acceptance in many industries, such as iGaming, technology, hospitality, and real estate.
These facts about Solana are the reason why this virtual currency has experienced a great growth, which has caught the attention of traders and investors. The attention that Solana has received has led many of these investors and traders to ponder the exponential growth that an ETF of this coin could bring. The introduction of a Solana ETF is expected to potentially cause the price of this coin to multiply by nine, let’s see why below.
Acceptance as iGaming Currency
Many online casinos now allow players to gamble with cryptocurrencies due to their faster payout speed and their ability to offer a more private and anonymous experience, as they often do not require checks such as KYC (source: cryptocasino.ltd).
For casinos that accept them, you can use your SOL tokens in over 2500 games such as slots, live table games and more. Its success in this and many other spaces is due to its innovative blockchain that improved upon Bitcoin’s Proof of Work (PoW) and Ethereum’s Proof of Stake (PoS), paving the way for its Proof of History (PoH) protocols that enable faster and more secure transactions.
GSR Markets Report
GSR Markets, a cryptocurrency market firm specializing in offering risk management and liquidity strategies to investors, among other services, made an interesting prediction about Solana in a recent reportAccording to this report, if a spot ETF is approved for this cryptocurrency in the United States, its price could potentially multiply ninefold.
Solana is currently valued at around $142, which means that if GSR Markets’ prediction comes true, the price of this coin could reach $1,280. However, one must understand why such a bold prediction was made.
An important factor behind GSR Markets’ forecast is that the firm believes a Solana ETF could capture 14% of the inflows we’ve seen captured by the Bitcoin ETF. What makes this forecast crucial is that it reflects the confidence and interest the market has in Solana as an investable asset.
Price scenarios
With the use of Solana in various commercial activities such as online stores, anonymous casinosand VPN service providers are also increasing, it is not surprising that many investors are feeling optimistic about an ETF of this token. However, we still need to consider all the scenarios that could arise with its introduction.
GSR Markets has forecast three scenarios that could play out after the launch of a Solana ETF. The most optimistic of these is what they call the blue sky scenario. If a blue sky scenario were to play out, in addition to this ETF taking 14% of the inflows that spot Bitcoin ETFs have received since they launched in January, the market cap of this coin would increase significantly.
Solana’s post-ETF market cap is expected to reach $614 billion, which would represent an increase of over 840% from the $65 billion the token currently sits at. Now let’s discuss the second scenario predicted by GSR Markets, which they call the base case. If the Solana ETF ends up experiencing this scenario, it is expected to attract at least 5% of the inflows that Bitcoin ETFs have received this year. If this were to happen, the SOL token would see its prices increase moderately, as their value would only be multiplied 3.4 times.
The last scenario forecast by GSR Markets is a bearish scenario that would see Solana spot ETFs receive only 2% of the inflows that Bitcoin ETFs have managed to capture. If this were to occur, the price of SOL would only multiply by 1.4 times. However, what investors should consider is that all of these numbers could be higher if the ETFs also included profits from staking rewards.
While a Solana ETF would be very lucrative for investors, there will be challenges. These include the coin’s recognition as a security and factors such as who wins the presidential election later this year. Additionally, the SEC will ultimately decide on Solana ETFs, which can be a lengthy process.
Recent developments
The good news is that despite the difficulties in obtaining a crypto ETF, several financial firms have begun to undergo this process. One such firm is the asset management firm VanEck, which has applied to offer the first Solana ETF in the United States. If the application is approved, VanEck will be able to offer its investors exposure to the Solana ecosystem.
Another company that is applying for a Solana ETF is Canadian hedge fund management company 3iQ. If this investment company’s application is approved, 3iQ would be able to offer Canadian investors the opportunity to track Solana’s performance and the ability to conveniently capitalize on the coin’s growth.
Conclusion
If a Solana ETF is approved, it could significantly increase the price of the token. We have already seen this with Bitcoin and Ethereum, where the introduction of an ETF has attracted institutional investors and significantly improved liquidity and demand. However, investors will still need to consider other scenarios that could materialize and regulatory hurdles that could prevent the approval of a Solana ETF.
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