- Sygnum suggests low investor demand for Solana ETFs.
- Solana’s Grayscale trust sees low inflows.
- BlackRock has no plans for a Solana ETF.
Exchange-traded funds (ETFs) have been widely anticipated in the crypto space, with many predicting a positive effect on the markets. This is because, unlike traditional crypto investments, ETFs offer a regulated way for institutions to invest in crypto.
For that reason, after the spot Bitcoin and Ethereum ETF approvals, Solana traders are hoping that SOL will be next. However, things are not looking good, as another institution has voiced its skepticism. After BlackRock cited a lack of institutional demand for altcoin ETFs, Sygnum Bank also weighed in.
Sygnum Bank Sees Low Demand for Solana ETFs
While Bitcoin and Ethereum ETFs have seen some inflows, major banks are skeptical of whether there is interest in Solana. Katalin Tischhauser, the head of investment research at the Swiss-based Sygnum Bank, recently shared her analysis.
Notably, Tischhauser highlighted the underwhelming investor flows into Grayscale’s Solana Trust (GSOL), another investment tracking SOL. Currently, GSOL’s assets under management (AUM) stand at less than $70 million. This figure pales in comparison to the $30 billion managed by the Grayscale Bitcoin Trust before its conversion to an ETF in January.
According to Tischhauser, the small AUM is due to Solana’s relatively low name recognition among institutions. Still, she revealed that GSOL shares trade at an unusually high premium to net asset value (NAV), upward of 7x. This means that the shares are seven times more valuable than the amount of SOL the fund holds.
“The high premium suggests some demand, but it’s not the kind of demand that will significantly impact the market,” according to Tischhauser.
BlackRock Skeptical Despite VanEck’s Solana ETF Filing
Like Sygnum Bank, BlackRock has also shown a cautious approach to altcoin ETFs, including Solana. In July, BlackRock’s head of digital assets, Robert Mitchnick, revealed that the firm saw very little client interest beyond Bitcoin and Ethereum.
These insights have tempered the expectations for a potential Solana ETF approval, following the VanEck filing in June 2024. At the time, this was seen as a significant vote of confidence for the asset. Even so, the firm’s Head of Digital Assets Research Matthew Sigel acknowledged that the approval hinges on a leadership change in the US Securities and Exchange Commission (SEC).
Other than being a much bigger asset, Bitcoin has another notable advantage over Solana. For many institutions, Bitcoin is seen as a counter-cyclical asset, meaning it often moves in the opposite direction of the market. For that reason, funds hold Bitcoin to lower the overall volatility.
On the Flipside
- Many analysts believe the approval of Solana ETFs in the US also depends on the outcome of the 2024 presidential election.
- The likely deadline for VanEck’s Solana ETF approval is in March 2025, according to Bloomberg analyst Eric Balcunas.
Why This Matters
If Solana ETFs do not generate significant interest or investment inflows, the expected positive impact on Solana’s price will be limited.
Read more about Solana ETF prospects:
Analysts Weigh In on Solana ETF Prospects Amid Fresh Filings
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