In the crypto sector, the buzz around exchange-traded funds (ETFs) continues to grow. GSR, a leading crypto market maker, suggests that while Cardano (ADA) and Ripple’s XRP may not see ETF approval soon, Solana (SOL) stands on the brink of a significant breakthrough.
GSR’s comprehensive analysis assumes a crypto-friendly regulatory approach in the US. In that case, ETF approval hinges primarily on two factors – decentralization and market demand. GSR has also disclosed that it has a long trade position on Solana.
How Solana Beats Other Altcoins in the Chances of ETF Approvals
According to GSR, Solana excels in both criteria, positioning it well ahead of its peers. The blockchain platform showcases a progressive move towards decentralization with its upcoming Firedancer client. It also captures substantial market demand, which is evident from its positive decentralization and demand scores.
Solana’s initiatives on the decentralization front are noteworthy. The introduction of Firedancer, aimed at diversifying its network client base, marks a significant step towards reducing central control and enhancing network resilience. This strategic move mirrors the decentralized ethos that regulators find appealing.
Read more: How to Buy Solana (SOL) and Everything You Need To Know
Market demand for Solana is equally compelling. The asset has consistently demonstrated strong market performance and high trading volumes, indicators of investor confidence, and potential for sustained demand. This makes Solana a strong candidate for an ETF, particularly when potential inflows play a pivotal role in asset selection.
Considering the decentralization score and demand score, GSR calculated a metric—the ETF possibility score. Ethereum (ETH) has the highest ETF possibility score, followed by Solana and NEAR Protocol (NEAR).
The rest of the altcoins, such as Avalanche (AVAX), Aptos (APT), ADA, XRP, and Cosmos (ATOM), have a negative ETF possibility score.
“All in, the results clearly suggest that Solana is next, should additional spot digital asset ETFs be permitted in the US,” GSR wrote.
GSR’s analysis also delves into the potential impact of ETF approval on Solana’s price. Drawing parallels with Bitcoin’s ETF journey, which catalyzed its price surge, Solana could experience a similar uplift. GSR outlines several scenarios, from conservative estimates of a 1.4x increase in price to an optimistic 8.9x jump under favorable conditions.
“We can adjust our relative flow estimates under the various scenarios for Solana’s relative size to Bitcoin’s 2.3x increase due to the spot ETFs. Doing so suggests Solana may increase 1.4x under the bear flows scenario, 3.4x under the baseline scenario, and 8.9x under the blue sky scenario,” GSR analysts predicted.
The recent move by VanEck, an asset manager, to file for a Solana spot ETF further bolsters the case for Solana’s ETF prospects. This pioneering step highlights the asset’s growing institutional appeal.
Read more: Solana (SOL) Price Prediction 2024/2025/2030
Mathew Sigel, Head of Research at VanEck, emphasized Solana’s alignment with the characteristics of established digital commodities.
“Solana’s decentralized nature, high utility, and economic feasibility align with the characteristics of other established digital commodities, reinforcing our belief that SOL may be a valuable commodity with use cases for investors, builders, and entrepreneurs looking for alternatives to the duopoly app stores,” Sigel said.
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