Trump Presidency Could Pave Way for Solana ETF, Major Crypto Trader Predicts

Trump Presidency Solana ETF
Under the Biden administration, Solana (SOL) appears unlikely to secure its own ETF in the U.S. However, market-making firm GSR suggests that if Donald Trump were to return to the White House, the possibility could become more feasible, potentially yielding greater returns than Bitcoin (BTC) did with its spot ETF debut.

According to a research note shared with CoinDesk, the U.S. presidential election could pave the way for additional crypto ETFs, including SOL. If Trump were re-elected, he might disrupt the typical process for launching crypto ETFs, which typically starts with federally regulated futures contracts—something Solana currently lacks.

The note speculates that under a Trump administration, there could be more permissive regulations for digital assets, potentially allowing for a range of spot digital asset ETFs. SOL, a prominent crypto asset trailing only BTC and Ethereum’s ether (ETH) (both of which already have U.S. ETFs), stands to benefit as one of the first candidates.

Solana is well-positioned for a spot ETF if additional spot digital asset ETFs are permitted in the U.S., potentially triggering substantial price increases,” the note from the market maker highlighted.

GSR’s internal analysis indicates that Solana, with strong market demand and a highly decentralized network, aligns well with the criteria that prospective ETF issuers consider when pursuing listings.

GSR notes that Bitcoin’s price more than doubled in the months around its spot ETF launch. If SOL were to attract just 5% of the investment inflows that Bitcoin did, its price could potentially triple. GSR considers this scenario a conservative estimate, based on the 5% inflow SOL investment products saw compared to Bitcoin’s inflows from 2021 to late 2023, prior to the ETF boom.

Under more optimistic scenarios (“blue sky” scenarios), with inflows reaching 14%, SOL’s price could skyrocket nearly ninefold, according to GSR’s analysis. While these figures are fractions of Bitcoin’s impact, the potential for significant price movements is amplified given Solana’s smaller market size.

However, the path to a Solana ETF is not without hurdles. Unlike Bitcoin and Ethereum, Solana has not traded in a federally regulated futures market for an extended period—a prerequisite for ETF approval under current regulations. This means that, barring regulatory changes, a SOL ETF launch could still be years away.

Brian Rudick, Senior Strategist at GSR and author of the memo, emphasized the speculative nature of these predictions. “All you really need is for Donald Trump to become president, and then regulatory changes could facilitate a short-term opportunity for a SOL ETF,” Rudick commented.

But he cautioned that Trump’s return and fulfillment of his crypto-related campaign promises are uncertain, underscoring the speculative nature of such predictions. The market’s response has also been cautious, as indicated by metrics such as the pricing discrepancy in Grayscale’s crypto trust products.

Rudick pointed out that Grayscale’s Solana Trust (GSOL) currently trades at a significant premium of around 750% over its net asset value, a gap that would likely narrow if GSOL were converted into an ETF, mirroring the experience of Grayscale’s Bitcoin Trust (GBTC).

However, Rudick noted that GSOL lacks liquidity, meaning that holders may not find sufficient buyers willing to purchase their overpriced trust shares.

In summary, while the potential for a Solana ETF exists under a hypothetical Trump presidency with favorable regulatory changes, uncertainties remain, and significant regulatory and market hurdles must be addressed before such an ETF could materialize.

Also Read: Matt Hougan: Ethereum Spot ETFs Could Attract $15B by 2025

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