Solana ETF Inflows Limited, JPMorgan Says
JPMorgan analysts stated this week that upcoming U.S. Solana exchange-traded funds (ETFs) are likely to face challenges in attracting record-breaking inflows. The analysis was released as more asset managers file to launch Solana ETFs, following the approval of major spot Bitcoin and Ethereum products.
Background: Solana ETFs Join Growing Crypto Product Lineup
The Securities and Exchange Commission (SEC) recently approved the Rex-Osprey Solana + Staking ETF in June 2024, making it the first Solana ETF available in the U.S. market. The product launched with $12 million in first-day inflows. Several other asset managers have submitted Solana ETF applications, encouraged by the substantial demand seen by spot Bitcoin and Ethereum ETFs since their U.S. market debut.
Solana is the blockchain supporting SOL, the sixth-largest digital coin by market capitalization. The network is known for its low transaction costs and high speeds, and is used for decentralized applications, decentralized finance, and various tokens. As of the latest data, Solana’s market cap stands at $120 billion, with the SOL token trading near $220 per coin, according to CoinGecko.
JPMorgan Report: Inflows to Lag Behind Bitcoin, Ethereum ETFs
While spot Bitcoin ETFs have gathered nearly $36 billion in investor inflows and currently manage close to $170 billion in assets, and Ethereum ETFs have collected $8.7 billion in their first year, JPMorgan does not expect Solana ETF inflows to match these figures. The analysts estimate that Solana ETFs could “potentially see around $1.5 billion of net inflows during their first year,” significantly lower than Bitcoin or Ethereum equivalents.
The report emphasizes two main barriers: “Spot Solana ETFs are less likely to gain significant inflows,” the analysts wrote. “Solana is not perceived by investors the same way as Ethereum as the main DeFi/smart contract cryptocurrency.” In addition, the emergence of multiple new crypto ETFs has led to “investor fatigue,” according to JPMorgan’s analysis (Decrypt).
The analysts further note that crypto treasury firms, which allow investors to access digital assets such as Bitcoin and Solana through equity holdings, might draw potential capital away from Solana ETFs.
Market Reaction and What’s Next for Solana ETFs
The introduction of Solana ETFs follows strong investor interest in crypto-based exchange-traded products, but early numbers suggest more subdued demand. Industry observers expect additional altcoin ETFs to enter the market as the SEC continues to evaluate new filings.
Despite the slower expected inflows for Solana ETFs, the network remains a prominent competitor to Ethereum due to its transaction efficiency and expanding decentralized ecosystem. Market participants will be watching Solana ETF performance closely as part of the evolving cryptocurrency ETF landscape (Vizi Cryptocurrency Coverage).
Sources
Reporting via Decrypt
