The recent surge in Bitcoin and Ethereum exchange-traded funds (ETFs) has ignited speculation about which cryptocurrency could be the next to gain such a coveted investment vehicle. Among the contenders, Solana has emerged as a potential candidate, with several asset managers expressing interest in launching SOL ETFs. However, experts are casting doubt on the prospects of these funds attracting significant investor interest.
Katalin Tischhauser, head of investment research at crypto bank Sygnum, has poured cold water on the enthusiasm surrounding Solana ETFs. She points to the underwhelming performance of Grayscale’s Solana Trust (GSOL) as a clear indicator of weak demand for SOL investment products among US wealth managers. With assets under management (AUM) of less than $70 million, GSOL pales in comparison to the behemoth that was Grayscale Bitcoin Trust (GBTC), which managed nearly $30 billion before its conversion to an ETF.
Tischhauser attributes the stark difference in AUM to the relative name recognition of Solana compared to Bitcoin. While the latter has cemented its status as the king of cryptocurrencies, Solana, despite its technological advancements, has yet to capture the same level of investor attention.
Furthermore, the high premium of GSOL shares to their net asset value (NAV) — currently upwards of 7x — suggests a degree of demand for the fund. However, Tischhauser cautions that this demand is far from substantial and unlikely to have a significant impact on the broader Solana market.
In contrast, Bitcoin and Ethereum ETFs have been a resounding success. Since their launch in January, Bitcoin ETFs have garnered more than three times the largest one-year inflow of any ETF in history, according to Grayscale’s global head of ETFs, Dave LaValle. The combined AUM of Bitcoin and Ethereum ETFs now stands at nearly $63 billion.
Despite the lukewarm reception to Solana, several asset managers, including Franklin Templeton, VanEck, and 21Shares, remain optimistic about the potential of SOL ETFs. However, even the industry giant BlackRock has expressed skepticism, citing “very little interest” from its clients.
Tischhauser believes that while smaller issuers may find it profitable to launch Solana ETFs, these products are unlikely to be game-changers for the crypto market. The dominance of Bitcoin and Ethereum, coupled with the relatively low profile of Solana, suggests that the road ahead for Solana ETFs will be challenging.
As the crypto market continues to evolve, it remains to be seen whether Solana can overcome these hurdles and gain the traction necessary to support a successful ETF.
