As VanEck applied to the US SEC for a Solana spot ETF, GSR Markets released a report stating that Solana has the potential to become the next digital asset spot ETF target. It predicts that in a bull market, it is expected to drive a nearly 9-fold increase in the price of SOL.
In the report, GSR Markets believes that the two key factors determining the next digital asset spot ETF are “decentralization” and “potential demand,” and thus analyzed the digital assets based on these two factors. In terms of analyzing decentralization, the institution proposed the following three indicators:
Satoshi Coefficient: It measures the minimum number of independent entities that could collude to attack the network. A higher number indicates a higher level of decentralization.
Staking Requirements: It measures the difficulty of anyone participating in the network as a node operator or validator, including minimum staking and hardware requirements. Lower staking and hardware requirements indicate a higher level of decentralization.
CCData Governance Rating: It includes various governance measures surrounding participation, transparency, and decentralization.
According to GSR Markets’ scoring (including a certain degree of subjectivity), the four blockchains with the highest decentralization scores are Ethereum, Solana, Avalanche, and Aptos.
In addition, when evaluating the potential inflow of funds for spot ETFs, the issuer may consider potential demand. GSR Markets analyzed this from three aspects:
Market Indicators: Higher market value, higher trading volume, and strong token performance may indicate strong future demand.
Existing Product AUM: The higher the global AUM of existing token investment products, the higher the potential demand for spot ETF products.
Activity Indicators: A strong, active community and widespread usage may also indicate future demand.
According to GSR Markets’ scoring, the three blockchains with above-average demand scores are Ethereum, Solana, and NEAR.
Finally, the two scores are added together to obtain the final ETF potential score. GSR Markets wrote in the report:
Solana Spot ETF’s Potential Impact on SOL Price
Furthermore, GSR Markets assessed the potential impact of a Solana spot ETF on the SOL price, referring to the impact of a Bitcoin spot ETF on Bitcoin. It pointed out that the Bitcoin price increased from around $27,000 in October to about $63,000 currently, an increase of 2.3 times, using this 2.3 times as a benchmark.
GSR Markets considered the following three scenarios to estimate the proportion of capital inflows into a Solana spot ETF relative to Bitcoin:
Bear Market Scenario: Solana’s global AUM for investment products is only 2% of Bitcoin.
Base Scenario: Evaluating Solana’s performance based on actual capital inflows from 2021 to 2023. During these three years, the cumulative capital inflow into Solana investment products relative to Bitcoin is 5%.
Optimistic Scenario (Blue Sky): In the past two years, Solana’s relative capital inflow has significantly increased, accounting for 31% and 9% of Bitcoin inflows in 2022 and 2023, respectively. GSR Markets took the average annual 14% relative capital inflow over these three years as the optimistic scenario.
The institution also took into account Solana’s relative market capitalization compared to Bitcoin and concluded after comprehensive evaluation:
In the bear market scenario, SOL could grow by 1.4 times.
In the base scenario, it could grow by 3.4 times.
In the optimistic scenario, SOL could grow by 8.9 times. As the current price of SOL is $145, this suggests that GSR Markets believes SOL could rise to $1,290.
Furthermore, GSR Markets also stated that the potential impact on SOL could be higher than these estimates because, unlike BTC, SOL is active in staking and decentralized applications. Considering the currently low expectations for the Solana spot ETF in the SOL price, this indicates that SOL’s potential upside may be even greater.
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