On Thursday, VanEck submitted an application for the first US-based spot Solana Exchange-Traded Fund (ETF), attracting significant interest from investors and analysts. GSR, a leading market maker, released a detailed analysis titled "Is Solana Next?" predicting a potential increase in SOL’s price by up to nine times under favorable conditions.

Potential Approval for the Spot Solana ETF

Founded in 2018 by Anatoly Yakovenko and Raj Gokal and launched in 2020, Solana is a cutting-edge blockchain known for high throughput, scalability, low transaction costs, and a wide range of decentralized applications (dApps). It has facilitated nearly 300 billion transactions and secured over $4 billion in total value locked.

Recent developments in the ecosystem, including notable token launches and project migrations, have strengthened Solana's market position. GSR’s report emphasizes Solana's continued innovation and growth, highlighting its impact on various blockchain applications.

Regulatory Challenges and Opportunities

The approval of a spot ETF largely depends on the evolving regulatory environment. Current US regulations require a federally-regulated futures market for any cryptocurrency considered for an ETF, a requirement currently met only by Bitcoin and Ethereum. However, GSR notes potential changes in the regulatory landscape due to increasing bipartisan support and legislative shifts, which may improve the chances for new crypto ETFs, including Solana.

Key Factors for ETF Approval

GSR’s analysis delves into factors influencing the approval and success of a potential spot ETF, such as the blockchain’s decentralization level and demand for Solana-based investment products. The report highlights Solana's strong decentralization metrics, including the Nakamoto Coefficient, staking requirements, and governance ratings, positioning it favorably for regulatory review.

Market Demand and Price Predictions

GSR also evaluates market cap, trading volumes, and existing investment products to assess demand for a Solana spot ETF. Strong market indicators and substantial assets under management (AUM) suggest significant potential demand.

The report outlines three scenarios for SOL’s price impact:

- Bear Case Scenario: Assuming minimal market share, equivalent to 2% of Bitcoin’s ETF inflows, Solana’s price could see a 1.4x increase.

- Base Case Scenario: With inflows amounting to 5% of Bitcoin’s, Solana’s price could potentially triple, offering a 3.4x increase.

- Blue Sky Scenario: Under optimal conditions, capturing up to 14% of Bitcoin’s inflows, Solana’s price could rise nearly 9x.

At the time of reporting, SOL traded at $144.