Spot Solana ETF Struggles to Maintain Momentum

Cryptocurrency data platform Kaiko recently reported that the launch of the spot Solana exchange-traded fund (ETF) did not significantly impact the market.

Despite initial enthusiasm and a brief price surge, Solana (SOL) quickly returned to its previous state, reflecting skepticism and regulatory challenges.

Brief Surge and Investor Disappointment: On June 27, VanEck submitted the first Solana ETF application to the U.S. Securities and Exchange Commission (SEC). Similarly, 21Shares submitted a similar application on June 28.

While these applications initially excited the market, Solana’s price only briefly increased by 6%. However, Kaiko revealed that this impact was short-lived, and the market dynamics soon reverted to their previous state.

Kaiko stated:

“These filings temporarily boosted market sentiment, but prior concerns about Mt. Gox repayments causing significant stock market sell-offs had kept emotions in check.”

Solana’s Cumulative Volume Dynamics: Solana’s cumulative volume delta (CVD), which measures net buying and selling activity, recorded a net positive CVD of $29 million over the past week. This increase was primarily driven by higher Coinbase spot purchases.

Compared to Ethereum (ETH) and other cryptocurrencies, investor expectations for the Solana spot ETF were not as high. Despite being dubbed an “Ethereum killer,” Solana struggled to maintain its momentum.

Comparison with Ethereum: After Ethereum’s spot ETF received partial approval on May 23, its price showed more sustained upward trends compared to Solana.

Limited Impact on Derivatives Market: Although SOL token’s volume-weighted financing ratio briefly surged on June 27, it quickly returned to neutral levels. Open interest contracts remained almost unchanged, indicating a lack of sustained bullish demand.

Regulatory Concerns and Solana’s Ecosystem Expansion: One possible reason for the muted market response is skepticism about the approval likelihood for the Solana spot ETF. Unlike Bitcoin and Ethereum, Solana lacks significant derivatives market exposure, making it challenging to convince regulators of its price stability and resistance to manipulation.

James Seyffart, an ETF analyst at Bloomberg Intelligence, concurred with this cautious view, emphasizing that Solana’s classification as a security could significantly hinder the approval process.

Despite these challenges, Solana’s DeFi ecosystem has seen rapid growth. Bitget Research reported that the total locked value (TVL) in Solana’s DeFi ecosystem increased from approximately $1.3 billion at the beginning of 2024 to around $4.5 billion by the end of June.

Solana Foundation’s Ongoing Innovations: The Solana Foundation continues to innovate, expanding its ecosystem with products like Solana Mobile, SDK, and the newly launched Solana Blinks.

Ryan Lee, Chief Analyst at Bitget Research, highlighted that these products lay the groundwork for Solana’s widespread adoption, demonstrating its adaptability to mobile internet development and the increasing number of active addresses on the chain.

Disclaimer: This price analysis article serves as reference only and should not be construed as financial or investment advice. Before making any financial decisions, please conduct your own research and consult professionals.

Sentiment: Neutral