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A research report released on Thursday by cryptocurrency market maker GSR highlights potential opportunities for the approval of a spot Solana ETF in the United States, particularly with the possibility of another Donald Trump presidency on the horizon.
The report suggests that Solana (SOL) could be next in line for ETF approval following Bitcoin and Ethereum, potentially leading to significant price gains for the cryptocurrency.
Drawing parallels with Bitcoin's price movement following its own spot ETF approval, the report presents three scenarios for Solana's potential price increase: A bear case estimate of a 1.4x price jump, a base case of a 3.4x increase, or a 8.9x increase “blue sky” scenario that would represent optimistic inflow estimates.
"Solana is poised for a spot ETF if and when additional spot digital asset ETFs are allowed in the U.S., and the impact on price may just be the largest yet," the report suggests.
GSR, which holds a long position in Solana, highlights a notable change in the political climate surrounding cryptocurrencies in recent months. Crypto has quickly developed into a potential wedge 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 newfound backing of the crypto industry, which in turn caused Democrats to loosen their stance against digital assets in a tight election year.”
This shift has already resulted in bipartisan support for crypto-friendly legislation, including the overturning of the SEC's SAB 121 accounting policy and the passage of the FIT21 digital asset regulatory framework in the House.
GSR's analysis introduces an "ETF Possibility Score" based on two key factors: decentralization and potential demand. Solana scored positively in both metrics, ranking second only to Ethereum on both marks in the firm's view.
"Solana is next, should additional spot digital asset ETFs be permitted in the U.S.," the report ultimately concludes.
Adding to the momentum, asset management firm VanEck filed an S-1 registration form on Thursday with the U.S. Securities and Exchange Commission (SEC) for a spot Solana ETF.
This marks a significant step as it is Solana's first spot ETF registration in the U.S., coming just six days after a similar product launched in Canada. The filing immediately impacted SOL’s price, which is up nearly 10% on the day.
SOL beats BTC?
The analysis also frequently compares Solana's prospects to Bitcoin's recent experience with spot ETF approval in the United States.
Notably, Bitcoin's price saw a 2.3x increase from $27,000 in October 2023—about three months before SEC approval—to approximately $63,000 this month, which GSR primarily attributed to ETF-related developments.
However, the report suggests that Solana's potential upside could be even more significant, given its greater utility across a wide array of applications and use cases built on Solana.
"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 wrote.
Edited by Andrew Hayward