A research report released Thursday by cryptocurrency market maker GSR highlights potential opportunities for approval of a Solana ETF in the United States, especially with the possibility of another Donald Trump presidency on the horizon.
He report suggests that Solana (SOL) could be next in line for ETF approval after Bitcoin and Ethereum, which could lead to significant gains in the cryptocurrency’s price.
Comparing Bitcoin’s price movement following the approval of its own spot ETF, the report presents three scenarios for Solana’s potential price increase: a bearish case with a 1.4x price increase, a base case with a 3.4x increase, or a “blue sky” scenario with an 8.9x increase, which would represent optimistic estimates of fund inflows.
“Solana is poised for a spot ETF if and when additional spot digital asset ETFs are allowed in the US, and the price impact could be the largest yet,” the report suggests.
GSR, which holds a long position in Solana, highlights a notable shift in the political climate around cryptocurrencies in recent months. Cryptocurrencies have quickly emerged as a potential hot-button issue in the upcoming election between incumbent Democratic President Joe Biden and his presumptive Republican challenger, former President Donald Trump.
In particular, the report notes “Donald Trump’s recent endorsement of the cryptocurrency industry, which in turn caused Democrats to soften their stance against digital assets in a tight election year.”
This change has already resulted in bipartisan support for pro-cryptocurrency legislation, including the repeal of the SEC’s SAB 121 accounting policy and the passage of the FIT21 cryptocurrency regulatory framework in the House.
GSR’s analysis introduces an “ETF Likelihood Score” based on two key factors: decentralization and potential demand. Solana scored positively on both counts, ranking second only to Ethereum in both metrics, according to the firm’s opinion.
“Solana is next, if additional digital asset ETFs are allowed in the US,” the report ultimately concludes.
Bolstering the predictions, asset management firm VanEck filed an S-1 registration form on Thursday with the U.S. Securities and Exchange Commission (SEC) for a Solana spot ETF.
This marks a significant step as it is Solana’s first ETF listing in the US, just six days after a similar product launched in Canada. The filing immediately impacted SOL’s price, which rose by almost 10% on the day.
Will SOL Overtake BTC?
The analysis also frequently compares Solana’s prospects to Bitcoin’s recent experience with spot ETF approval in the United States.
Importantly, the price of Bitcoin saw a 2.3x increase, going from $27,000 in October 2023—approximately three months before SEC approval—to approximately $63,000 this month, an increase that GSR primarily attributed to developments related to ETF.
However, the report suggests that Solana’s upside potential could be even more significant, given its broader utility across a wide range of applications and use cases.
“Unlike BTC, SOL is actively used for staking and within decentralized applications and, as such, the relationship between relative flows and relative size may not be linear,” GSR highlighted.
Edited by Andrew Hayward
