Solana (SOL) Is the Clear Contender to Be the Next Cryptocurrency to Get an ETF

With investors anticipating approval of an Ethereum ETF in the US on Thursday, all eyes are turning to which cryptocurrency may be next. For many, there's a clear candidate — Solana.

As investors await news on the approval of an Ethereum ETF on Thursday, many are speculating on which cryptocurrency could be next in line for a similar product.

Solana (SOL) is emerging as a strong contender, with several industry experts predicting its inclusion in the next wave of ETF applications.

CNBC presenter Brian Kelly highlighted Solana's significance in the crypto market during an interview on Wednesday. He stated that Bitcoin, Ethereum, and Solana are likely to be the "big three" cryptocurrencies in this cycle.

"You got to think about Solana as probably the next one. Bitcoin, Ethereum Solana are probably the big three for this cycle."

Solana's standing as the fifth-largest cryptocurrency, with a market capitalization exceeding $77 billion, further strengthens its case for an ETF.

According to CoinGecko, SOL has surged by over 68% this year, making it one of the best-performing cryptocurrencies in the top 100.

Solana's embrace of memecoins earlier this year and its foray into unorthodox ventures, such as the launch of a new mobile phone called Chapter 2, have also contributed to its rising popularity.

The arrival of an Ethereum ETF, following four months after the launch of spot Bitcoin funds, is expected to bolster the DeFi market.

Over the last seven days, Ether has rallied by 29%, outperforming Bitcoin by a factor of six. Solana, on the other hand, has managed to outpace both Bitcoin and Ether thanks to its unique strengths.

Wall Street giants, such as BlackRock, which were once known for their skepticism towards cryptocurrencies, are now actively engaging in the market to package cryptocurrencies into exchange-traded funds, making them easily accessible to investors.

BlackRock, Van Eck, and Fidelity have all submitted applications to launch Ethereum ETFs, which are expected to be approved by the US Securities and Exchange Commission on Thursday.

Solana, being a proof-of-stake token similar to Ether, could benefit from regulators' familiarity with the product design of staked assets.

"Technically speaking, a Solana ETF that has similar unstaked characteristics to the ETH vehicles being reviewed should bring no reasonable objection."

“Given the developer activity, I view a SOL ETF as having a greater than 75% of listing this year, and over 95% next year.”

However, some analysts remain skeptical about the prospects of a Solana ETF approval in 2024, as indicated by Polymarket, a prediction market closely followed by crypto investors.

According to the platform, a Solana spot ETF has a 7% chance of being approved this year, with a betting pool of just over $100,000, suggesting that the proposition is not yet جذاب enough to speculators.

Nate Geraci, co-founder of the ETF Institute and President of the ETF Store, expressed pessimism regarding the approval of a Solana ETF without the introduction of Solana futures contracts.

Prior to the approval of the spot Bitcoin ETF, futures contracts for Bitcoin were already approved to trade on the Chicago Mercantile Exchange, one of the largest derivatives exchanges in the world. The same applies to Ethereum.

According to Geraci, a clear regulatory framework for digital assets in the US, approved by Congress, is also necessary before a Solana ETF can be green-lighted.

Spot price ETFs are usually designed for retail investors, although institutions also utilize them extensively.

While regulators have historically been hesitant to expose retail investors to crypto ETFs, several recent developments appear to be paving the way for altcoin funds.

On Wednesday, the US House of Representatives passed the FIT21 bill, a comprehensive piece of legislation to govern digital asset markets. The bill received support from 71 Democrats, which is noteworthy considering the party's previous lukewarm stance on crypto.

The bill still needs to pass the Senate, and President Biden has indicated his opposition to the legislation. However, the White House has stated that it will work with Congress to establish a regulatory framework for the industry.

Is that sufficient to propel Solana into serious contention? Skeptics say not yet, but then again, it wasn't long ago when the prospect of an Ethereum ETF seemed like a distant dream.