Solana (SOL) Price Prediction: Can it Really Surpass Bitcoin and Ethereum?

Solana

Solana

Solana (SOL), the cryptocurrency powering the Solana blockchain ecosystem, is hinting at another significant rally despite its current price dip. This comes after a remarkable 2023 where SOL skyrocketed by over 1500%, propelling it to the fifth position among cryptocurrencies, surpassing established players like XRP, Cardano, and even Dogecoin.

Grayscale Solana Trust (GSOL) Trades at a Whopping Premium

Adding momentum to the potential breakout is the Grayscale Solana Trust (GSOL) currently trading at a staggering 620% premium over its Net Asset Value (NAV). According to Jamie Coutts, Chief Crypto Analyst at Real Vision, this surge coincides with the recent wave of spot Solana ETF applications filed in the United States and Canada.

For those unfamiliar, the GSOL NAV represents the total value of all SOL holdings within the trust divided by the number of outstanding GSOL shares. When GSOL trades above NAV, it signifies a premium, indicating investors’ willingness to pay more for the underlying asset, which in this case is SOL. The limited supply of GSOL shares appears to be a major factor contributing to the premium. While SOL can be freely traded on various platforms, GSOL has a restricted number of shares available. This scarcity, coupled with institutional anticipation of a price surge in the coming months, could be driving investors towards GSOL as a means to gain exposure to SOL, consequently inflating the premium.

Crypto Community Anticipates Spot Solana ETF Approval

Excitement is simmering within the crypto community regarding the possibility of Solana potentially surpassing Bitcoin and Ethereum in terms of gains in the coming months, replicating its impressive performance from the first quarter of 2024. This anticipation stems from the recent applications filed by VanEck and 21Shares with the U.S. Securities and Exchange Commission (SEC) for spot Solana ETFs in late June.

VanEck, through its Head of Digital Assets Research, Matthew Sigel, highlighted Solana’s decentralization, utility, and economic viability as key factors behind their proposed ETF. Sigel further argued that SOL qualifies as a commodity similar to Bitcoin.

Challenges to Spot Solana ETF Approval

Securing approval from the SEC for a SOL ETF is proving to be quite challenging, particularly since there’s no established futures market for SOL, unlike Bitcoin and Ethereum which have established markets on the Chicago Mercantile Exchange (CME). To further complicate matters, the SEC has even classified SOL as an unregistered security during their legal battles with Binance and Coinbase.

Looking Ahead

While Solana (SOL) displays potential for another breakout rally, significant hurdles remain before spot Solana ETFs are approved in the U.S. and Canada. The Grayscale Solana Trust’s premium trading and the recent ETF applications signal strong institutional interest, but regulatory hurdles and the lack of an established futures market pose challenges that need to be addressed.