In short
- Solana exchange-traded funds could get the green light this month.
- But investor fatigue and increased interest in Ethereum could dampen flows into the products, JP Morgan analysts say.
- A number of top asset managers tried to get SEC approval for a SOL ETF this year.
US exchange traded funds offer investors Solana Exposure will struggle to break records, JPMorgan analysts said this week.
More Solana ETFs are expected to hit US markets in the near future as the Securities and Exchange Commission considers the applications, but investor “fatigue” and a more favorable perception of the prospects Ethereum is likely to hinder the flow into the products, researchers wrote in a report on Wednesday.
Asset managers have filed a long list of altcoin ETF applications following the massive success of spot Bitcoin and Ethereum funds, which debuted in the US last year. But the banking giant doesn’t expect the same kind of demand those funds saw.
“Spot Solana ETFs are less likely to generate significant inflows,” the report said. “Solana is not viewed by investors in the same way as Ethereum as the premier DeFi/smart contract cryptocurrency.”
It added: “Second, there is likely to be investor fatigue as multiple cryptospot ETFs are launched.”
The report further noted that crypto treasuries – companies that buy assets such as Bitcoin and Solana so that investors can gain exposure through stocks – could also divert money from SOL ETFs. Still, the analysts predicted that Solana ETFs “could potentially see net inflows of approximately $1.5 billion during their first year.”
Investors threw nearly $36 billion at the US spot Bitcoin ETFs in their first year, while their Ethereum counterparts received $8.7 billion after one year of trading.
The SEC gave the green light to spot Bitcoin ETFs in January 2024. The funds had the most successful launch in ETF history and currently manage nearly $170 billion in assets.
Ethereum ETFs got off to a slower start after their May 2024 approval, but now collectively manage more than $31 billion in assets.
Industry observers now expect more altcoin ETFs to get the green light.
That’s what the SEC said Yes to the first Solana ETF, the Rex-Osprey Solana + Staking ETF, in June, and the received $12 million in first day inflows.
Solana is the crypto network behind the sixth largest digital currency, SOL. The Solana blockchain is used for this decentralized applications, decentralized finance, meme coinsand more.
It is seen as an important competitor to Ethereum, the network behind it ETHthus offering cheaper and faster transactions. SOL currently has a market cap of $120 billion and recently traded for $220 per coin, according to CoinGecko.
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