Cryptocurrency trading firm GSR has taken a long position on the smart contract platform Solana (SOL) citing its “superior technology,” and suggesting its “likely just a matter of time” before Solana gets a spot exchange-traded fund (ETF) trading in the United States.
In a recently published note GSR highlighted Solana’s features including its Proof-of-History mechanism and its “ultra-cheap transaction costs” and “wide array of decentralized applications,” as well as its “bustling user and developer communities.” It touted the release of innovations like token extensions over its technology which the firm said “provides a sustainable competitive advantage.”
The firm acknowledged that Solana’s focus on speed and security may come at the expense of some decentralization, but added it believes this trade-off will become less significant as hardware costs decline.
GSR’s bullishness on Solana coincides with a political twist. The firm suggests that former President Trump’s recent support for the cryptocurrency industry, coupled with a potential softening stance from Democrats in a tight election year, could pave the way for a more favorable regulatory environment. This, in turn, could accelerate the approval of spot ETFs for cryptocurrencies beyond Bitcoin.
The report underscores Solana’s potential for significant price appreciation, particularly if a spot ETF is approved. GSR forecasts SOL prices could increase by 1.4x to 8.9x depending on market conditions, potentially exceeding gains seen by Bitcoin when the first spot Bitcoin ETFs launched earlier this year. The post adds:
“Moreover, there are reasons to believe the impact could be higher than these estimates, since unlike BTC, SOL is actively used for staking and within decentralized applications and as the relationship between relative flows and relative size may not be linear.”
GSR also pointed out that “there is likely much less in the price of SOL for a potential spot Solana ETF than there was for Bitcoin at the start of our analysis as inferred by the Grayscale Trust deviations from NAV.” If so, it noted that SOL’s potential upside with a spot ETF could be seen as a “free option.”
Solana’s price is up around 9% over the last few days to now trade at $145 after one of the first issuers of spot Bitcoin exchange-traded funds, VanEck, filed with the Securities and Exchange Commission (SEC) to launch a new spot Solana ETF.
The filing, announced on social media by Matthew Sigel, VanEck’s head of digital assets research, proposes the creation of the VanEck Solana Trust, which would be the first-ever spot Solana ETF in the United States.
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