Solana-based ETFs in 2025
2024-11-30

ATH 

Most recently, the price of Solana formed a new all-time high (ATH) at $264.39 this November. The previous all-time high was four years ago. On November 6, 2021, the price reached $259.90. Exceeding past highs is a known bullish signal. However, four years ago, the price of $260 should be considered expensive, and now the same price of $260 should be considered cheap. There have been important changes.

 Correlation 

The price of Solana has a strong positive correlation with Bitcoin. This analysis uses the daily closing price charts of Bitcoin and Solana on a logarithmic scale. On November 6, 2021, when the price reached its high, Solana was worth $258.44. On the same day, Bitcoin was worth $61,470.61. Solana was approximately 238 times less expensive than Bitcoin. Solana's last closing price high was on November 22, 2024. This price was $256.90. On the same day, Bitcoin was worth $98,892. On that day, Solana was approximately 385 times less expensive than Bitcoin. If the price difference between Bitcoin and Solana were to remain consistent with that of 2021, Solana would be worth about $415 today. Solana has not worsened in those four years; on the contrary, it has improved. This suggests that Solana is currently undervalued.



 Capitalization 

Market capitalization is often referred to as 'network value' in the context of cryptocurrencies. On November 6, 2024, Solana’s market capitalization exceeded that of BNB. Since then, Solana’s market capitalization has remained higher than BNB’s. This makes Solana the third-largest blockchain by this metric, excluding stablecoins. 



 Competition 

Solana's blockchain competes with other smart contract platforms, such as Ethereum. One of the main challenges Solana has faced is its operational reliability, as the network has experienced several outages and performance issues. However, in recent years, many of these technical problems have been addressed, and the network's stability has improved, though occasional issues still occur. Solana is known for its high throughput and low transaction fees, making it faster and cheaper to use compared to Ethereum. While Ethereum's major advantages include its mature ecosystem, wide developer adoption, and integration with DeFi, dApps, and NFTs, one additional advantage is the possibility to invest in Ethereum through ETFs. There are discussions about the potential for a Solana ETF in the future, but no official date has been confirmed.

 TVL 

Solana has not only increased its market capitalization, but also improved other important indicators. The Solana blockchain's total value locked (TVL) metric has been showing consistent growth recently. On July 20, 2024, the TVL of the Solana blockchain exceeded that of Binance Smart Chain (BSC) for the first time. At that time, this placed Solana in third place for this metric among all blockchains. By November 9, 2024, Solana's TVL had already surpassed that of Tron (TRX). Thus, Solana became the second blockchain by this metric, holding a 6.78% share of the DeFi market. Just one year earlier, on November 9, 2023, Solana was in 8th place in the TVL ranking with a share of 1.04%. Ethereum (ETH) continues to hold first place in the TVL ranking. Solana's TVL has continued to increase in recent months. At the same time, its growth rate has accelerated.

 ETF 

The growth in market capitalization and TVL attracts investors' attention to Solana as an asset. As a result, several companies are seeking to create a Solana-based exchange-traded fund (ETF). Currently, four investment companies have filed applications to create a Solana-based ETF with the Securities and Exchange Commission (SEC). Among the companies that have submitted applications to the SEC are VanEck, 21Shares, Canary, and Bitwise.



Thus, the number of companies seeking to create a Solana-based ETF is greater than for any other blockchain.

The emergence of Bitcoin-based ETFs has impacted the price. As a result, institutional investors were able to invest in Bitcoin. This, of course, increased the demand for the coins and their prices. However, Ethereum did not grow in price as much after the appearance of its ETFs. The reason is that staking in the independent ownership of ETH coins allows investors to extract more profits. Therefore, Ethereum-based ETFs are less attractive to investors.

 Chance 

The applications to create an ETF based on Solana are unlikely to be approved by the current SEC administration headed by Gary Gensler. This is the opinion of James Seyffart, an ETF research analyst at Bloomberg Intelligence. Here's what he wrote on X (formerly Twitter).

 Covered Solana ETFs' likely approval in the next year or two under Trump's new SEC. *BUT* they could very easily fail to be recognized under this current SEC admin. They were functionally rejected that way in July/Aug when CBOE first filed on behalf of VanEck & 21Shares. 

But on November 22, 2024, it became known that Gary Gensler would leave office on January 20, 2025, when Joe Biden's presidential term expires. Donald Trump wants to appoint a cryptocurrency supporter to the position of SEC Chair. Trump himself is very loyal not only to cryptocurrencies but also specifically to Solana. Therefore, the probability of ETF approval may be quite high.

 Mr. President 

Trump has already used the Solana blockchain several times to sell his NFT collections. Trump chose this blockchain; perhaps he likes it. Besides Trump, the former first lady has also sold her NFTs using the Solana blockchain. NFTs featuring Melania Trump's eyes can be seen in the top chart. However, NFTs were previously distributed by the former president and former first lady. Now that he is president again, Solana will receive much more attention. And where there's increased attention, there's increased investment. Where there's increased investment, there are increased prices.

 When? 

An ETF based on Solana is likely to launch in 2025. The SEC has set a final deadline of August 8, 2025. Since it approved previous applications for Bitcoin and Ethereum-based ETFs in the days leading up to the deadline, it is possible that the situation will repeat itself. I think August is the most likely month.

 “Even if altcoin ETF filings begin the 19b-4 process today, decisions could take until late 2025,”  Seyffart stated.

 Altseason 

Cryptocurrency market analysts highlight a period of time when altcoin prices rise more strongly than Bitcoin. They call this period the "altcoin season." The altcoin season has not started yet, but it is very likely to start in the near future. During the altcoin season, the price of Solana is more likely to rise because it is also an altcoin.

 Risks 

The SEC may reject all applications to create a Solana-based ETF. Most likely, this rejection will lead to a rapid decline in Solana's price.

Solana is a high-risk and highly volatile asset. After the last all-time high, the price fell by 97%.

 Summary 

Pricing Solana in 2021 at $260 can be considered high. However, in 2024, the same $260 might be seen as undervalued. Solana's performance indicators, such as TVL and reliability, have improved significantly over time. Solana's mass adoption has also grown notably. Solana was 238 times less expensive than Bitcoin at its price peak in 2021, and now it is already 385 times less expensive.

I expect the price of Solana to exceed at least $400 by 2025, and with a high probability, it could reach $500-600. However, this would likely require the SEC to approve a Solana ETF.