What Is a Spot Solana ETF? Will It Be the Next Big Thing After Spot Ethereum ETFs?

With the likely approval of a spot Ethereum exchange-traded fund (ETF) on July 23, the cryptocurrency world is buzzing about the potential for a Solana spot ETF. Whether the SEC reviews these filings with a decision due by March 2025 and an SOL ETF becomes reality or not, check out various Solana price predictions and insights on a potential spot Solana ETF approval by the US SEC. 

• VanEck and 21Shares file for the first spot Solana ETFs, indicating significant institutional interest.

• The SEC's decision on these ETFs is expected by mid-March 2025, a crucial date for Solana investors.

• Approval of a spot Solana ETF could drive significant institutional investment, boosting liquidity and price.

• Analysts foresee potential all-time highs, with predictions ranging from $550 to $950.

Solana (SOL) is a fast, scalable, and user-friendly layer-1 blockchain platform that handles more transactions per second with significantly lower fees than other blockchains like Ethereum. It uses a unique combination of proof-of-stake (PoS) and proof-of-history (PoH) consensus mechanisms for efficiency and allows developers to create decentralized applications (dApps) using smart contracts. Solana's high speed and low transaction fees make it ideal for various applications, including decentralized finance (DeFi), non-fungible tokens (NFTs), blockchain gaming, supply chain management, and payments, offering a secure and cost-effective solution across industries.

Solana (SOL) is capturing the crypto community's attention with the recent filing of the first spot Solana ETF by VanEck, followed closely by 21Shares. This move has significant implications for Solana's price and market position, potentially marking a turning point for this prominent altcoin.

VanEck's spot Solana ETF filing with the Chicago Board Options Exchange (CBOE) and 21Shares' subsequent filing has set the stage for a significant development in the crypto market. The Securities and Exchange Commission (SEC) has until mid-March 2025 to approve or reject these filings. If approved, these ETFs could pave the way for increased institutional investment in Solana, driving its price higher.

Read more: VanEck Files for First Solana ETF in the U.S.: A Potential Game-Changer? 

Is There a Futures-Based Solana ETF?

A futures-based Solana ETF isn't currently available to trade on any U.S. market, but there are ETF-like products investors can buy, including the Grayscale Solana Trust (GSOL), which is a closed-end fund, and VanEck Solana, which is an exchange-traded note (ETN).

The recent approval of spot Ethereum ETFs has fueled speculation about a Solana ETF; however, that does not automatically translate into approval of other crypto ETFs.

“It’s unlikely that the approval of ETH will result in a large wave of approvals,” Ophelia Snyder, co-founder and president of 21.co — a sponsor and subadvisor for ARK Invest’s spot ether ETF — told Cointelegraph.

The future of a Solana ETF depends on regulatory decisions and how Solana addresses potential centralization issues. U.S. politics may also weigh into the decision and timeline of the next crypto ETF. 

For example, Bloomberg analyst Eric Balchunas told etf.com that the Ethereum ETF approval was likely fast-tracked by former president and current Republican presidential nominee frontrunner Donald Trump’s statement at a May 8 rally, saying, “If you’re pro-crypto, you have to vote for Trump.” Balchunas added that “the Dems don’t want to be seen as anti-crypto anymore.”

The imminent launch of the first spot Ether ETFs has opened the floodgates for more crypto exchange-traded products, including a potential Solana-based ETF. The first batch of spot Ether ETFs will pave the way for more crypto ETFs, according to Eric Balchunas, a senior ETF analyst at Bloomberg.

On July 10, 2024, Circle, a prominent stablecoin issuer, minted $250 million worth of USDC on the Solana blockchain. This significant influx has bolstered market optimism surrounding Solana ETFs, potentially impacting the token’s price trajectory positively.

At the time of writing, Solana price is trading at $143.85, reflecting an 8.14% increase over the past week. The recent minting of USDC on Solana suggests a growing demand for the underlying asset, SOL. This move aligns with Circle’s stated mission to enhance liquidity on the Solana network, a commitment reaffirmed through this substantial injection.

Market indicators are aligning favorably for Solana. The Moving Average Convergence Divergence (MACD) indicator has recently experienced a bullish crossover. This occurs when the MACD line crosses above the signal line, suggesting growing positive momentum for Solana.

This bullish crossover indicates increased buying interest, which could support further price gains for Solana. The overall market sentiment is turning bullish, a crucial factor as the crypto market recovers from recent downturns.

Read more: Solana (SOL) Daily Transactions Rise 34% in June Amid Bullish Spot ETF Sentiment

Critical Support and Resistance Levels

As of now, Solana is trading at $159, having rebounded from a critical support level of $126. This level has been tested multiple times over the past few months. The next significant resistance level for Solana is at $160. If Solana can breach and establish $150 as a new support floor, it could pave the way for further price increases, potentially flipping the crucial $160 resistance into support.

However, if Solana fails to hold the $126 support level, it could face significant losses, potentially dropping to $100 and invalidating the current bullish outlook.

Solana technical analysis | Source: X

Supertrend Indicator: Buy SOL at $125, But Resistance at $160? 

The Supertrend indicator on the daily chart is generating a buy signal at $125.18, supporting the notion that SOL price could maintain its upward momentum. The Supertrend, which highlights trends and signals buy or sell actions, currently shows the green area below the price, indicating a bullish signal.

Additionally, the MACD indicator, which uses 12-day and 26-day moving averages to gauge trend strength, is also in positive territory. This further corroborates the bullish outlook for SOL price, suggesting that it could continue to rise towards $160, where it might face resistance.

Solana price chart | Source: TradingView 

Analyst Ali Martinez recently forecasted that SOL could potentially follow a similar pattern to its 2021 breakout, with a long-term price target above $950 by the end of the current bull cycle. This optimistic projection is grounded in past performance and current market trends.

Moreover, the Fibonacci Retracement indicator identifies key support and resistance levels for SOL, offering additional insights into potential price targets. These levels are crucial for traders looking to predict future price movements and make informed decisions.

SOL price under bear, baseline, and bullish scenarios | Source: Cointelegraph

According to a report on Cointelegraph, GSR Markets suggests that Solana ETFs in the US could boost SOL price by a factor of 9. GSR's estimates range from $149 reaching over $1,320 in a bullish scenario.

The potential approval of a spot ETF for Solana holds broader implications for the crypto market. A spot ETF allows investors to buy shares that represent actual ownership of the underlying asset, in this case, Solana. This differs from futures-based ETFs, which derive their value from contracts betting on the future price of the asset.

Approval of a spot ETF for Solana would likely increase liquidity and accessibility for institutional investors, who may have been hesitant to invest directly in cryptos due to regulatory and custodial concerns. This increased institutional participation could drive significant price appreciation for Solana and enhance its market stability. For instance, US-based spot Bitcoin ETFs have recorded over $16 billion in inflows since their launch in January, according to a news report on CoinDesk. 

The filing of the first spot ETF for Solana by VanEck and 21Shares marks a significant development for the crypto. With the SEC’s decision pending until March 2025, the anticipation surrounding these applications could contribute to short-term price volatility. However, the bullish crossover in Solana’s MACD and the potential for breaking key resistance levels suggest a positive outlook for SOL.

Investors and traders should keep a close eye on Solana price movements and market sentiment as the approval process unfolds. The introduction of a spot ETF for Solana could be a game-changer, fostering greater adoption and investment in this promising altcoin. As always, market participants are encouraged to stay informed and consider the broader market conditions.