In the field of cryptocurrency, discussions around exchange-traded funds (ETFs) continue to heat up. GSR, a leading cryptocurrency market maker, has stated that while Cardano (ADA) and Ripple’s XRP may not receive ETF approval soon, Solana (SOL) is poised for a major breakthrough.
GSR’s comprehensive analysis assumes that the US will adopt a cryptocurrency-friendly regulatory approach. In this case, ETF approval depends mainly on two factors – decentralization and market demand. GSR also revealed that it holds long positions in Solana.
According to GSR, Solana performs well on both of these criteria, far ahead of its peers. The upcoming Firedancer client from the blockchain platform demonstrates progress towards decentralization. It also captures significant market demand, as evidenced by its positive decentralization and demand scores.
Solana’s decentralization efforts are noteworthy. The launch of Firedancer, which aims to achieve network client diversification, marks an important step towards reducing centralization control and enhancing network resilience. This strategic move reflects the decentralized spirit favored by regulatory agencies.
Market demand for Solana is also impressive. The asset has consistently shown strong market performance and high trading volume, which is an indicator of investor confidence and has the potential for sustained demand. This makes Solana a strong candidate for ETFs, especially when potential inflows play a key role in asset selection.
Taking into account decentralization scores and demand scores, GSR calculates an indicator – ETF probability score. Ethereum (ETH) has the highest ETF probability score, followed by Solana and NEAR Protocol (NEAR).
The ETF probability scores for other altcoins such as Avalanche (AVAX), Aptos (APT), ADA, XRP, and Cosmos (ATOM) are all negative.
GSR wrote: “In summary, the results clearly indicate that if the US allows for the issuance of more spot digital asset ETFs, Solana will be the next one.”
GSR’s analysis also delves into the potential impact of ETF approval on Solana prices. Similar to Bitcoin’s ETF journey, Solana may experience a similar surge, which catalyzed the rise in Bitcoin prices. GSR outlines several scenarios, from a conservative estimate of a 1.4x price increase to an optimistic estimate of an 8.9x price increase under favorable conditions.
Asset management company VanEck recently applied for a Solana spot ETF, further enhancing Solana’s ETF prospects. This groundbreaking move highlights the asset’s growing institutional appeal.
VanEck’s research director, Mathew Sigel, emphasized Solana’s alignment with mature digital commodity features.
Sigel said: “Solana’s decentralized features, high utility, and economic viability are consistent with the characteristics of other mature digital commodities, which further confirms our belief that SOL may be a valuable commodity for investors, builders, and entrepreneurs seeking alternatives to the duopoly app store.”
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