[TL; DR]
A number of asset management firms including VanEck have filed applications for Solana ETFs.
The existing regulatory uncertainty in the United States is the greatest hurdle for the SEC’s approval of Solana ETFs.
The SOL price may reach $190 before the end of 2024.
Introduction
Crypto Spot ETFs are becoming popular among investors as they provide an opportunity for people to invest in regulated markets. Currently, Bitcoin has the highest number of spot ETFs on the market which has attracted many investors. In recent months the United States SEC approved the introduction of Ethereum spot ETFs which are likely to increase liquidity in the crypto market. Right now, some asset management firms have made proposals to launch Solana spot ETFs. This article analyzes the possibility of the approval of Solana ETFs in the United States. It will also delve into the potential impact of Solana ETFs.
Solana Market Analysis: SOL Performance Amid the Prospect of ETF Launch
A few days ago, the rumor that VanEck, one of the leading asset management firms, filed an application for a Solana spot ETF caused the cryptocurrency’s price to surge by over 10%, showing the interest that investors have in crypto ETFs. The same market hype occurred when spot bitcoin ETFs were launched in the United States. A few days later, 21Shares joined the Solana ETF race when it filed its application.
The aim of VanEck and 21Shares is to launch crypto ETFs that will track the value of Solana. Solana, with a market capitalization of $67,426,660,713 is ranked number 5 in the crypto market. Apart from Bitcoin and Ethereum, only Binance Coin and Tether USDT are ranked higher than it. This shows that it has a high market share within the crypto sector. As such, the launch of SOL ETFs will likely have a significant effect on the market. Soon after the ETF filling announcement the SOL price spiked. At the time of writing, Solana which is currently trading at $145.17 has gained by 5.7% within the last 14 days and by 405% within the last one year.
Although there is a fair chance that the United States SEC may approve SOL ETFs several hurdles lay ahead. First, the SEC has always been cautious about crypto ETFs due to the possibility of market manipulation by the providers. It was easier for the SEC to approve bitcoin and Ethereum ETFs since they had futures products. However, Solana does not have any crypto futures. In addition, the Solana outages may also create questions about its reliability and stability which may influence the SEC to decline the applications.
Also, although the SEC has approved Bitcoin and Ethereum ETFs there is still lack of regulatory clarity in the sector. For example, it is not yet clear whether SOL is a commodity or security. Therefore, there may be a need for clarity on the SOL classification before the approval of its ETFs.
Solana ETF Launch Impact on the Crypto Market
The approval and launch of Solana ETFs will bring many benefits to the asset and to the entire crypto sector. An example of a Solana crypto ETF impact is a rise in SOL investors which may drive its price up. After the launch of the SOL ETF many investors will likely pour their funds in the Solana market which may increase its demand and liquidity. That can also help to stabilize its price.
In addition, the approval of Solana ETFs will validate the crypto asset as a viable investment instrument alongside bitcoin and Ethereum which are the market leaders. That validation will position Solana as a leading blockchain which may result in its greater adoption than before. In the general sense, the approval of another crypto-based ETF may broaden the acceptance of cryptocurrencies in the investment sector.
The bitcoin ETF approval impact also applies to any possible launch of SOL ETFs. Since the launch of bitcoin and Ethereum ETFs has solidified their status in the investment sector the same will apply to Solana. The approval of the SOL ETF will endorse and validate SOL as a worthy investment asset. That will encourage conservative investors to consider adding Solana to their investment portfolios. Based on recent cryptocurrency market analysis the launch of SOL ETFs will positively affect the Solana market performance.
Considering the current blockchain technology trends the approval of SOL ETFs will lure other leading crypto projects such as XRP and TRX to push for the launch of their ETFs as well. Thus, the approval of SOL ETFs may result in a proliferation of cryptocurrency-based ETFs which will likely lead to a rise in crypto market liquidity.
Solana Price Movement – Short-term and Long-term Predictions
We will base the Solana price trajectory on the market conditions that existed within the first week of July and the emerging trends. Since the beginning of July when the Solana ETF prediction spread the Solana price has been ranging between $132 and $145.50. Based on the technical analysis SOL during that period the Solana future outlook was bearish. For example, the SOL’s relative strength index reading was around 40.7 which is a bearish indication. The bulls' failure to stimulate SOL demand would lead to a strong bearish momentum.
At the time of writing SOL is trading slightly above $145 and has been bullish within the last few days. However, its price line is still below the 50-day moving average, making it doubtful if it may maintain this short-term bullish momentum. However, the 200- day moving average is still below the price level making the price upward-oriented. If the SOL price stays above $145 it may rise towards $170. It may even reach $190 in the medium to long-term time frame.
Solana’s closest key resistance levels are $ 146.21 and $ 149.01. A rise above $149 will indicate a strong bullish momentum. On the other hand, $ 139.09, $ 136.28 and $ 134.13 are its nearest support levels. A drop below $134.13 will indicate a strong SOL price bearish momentum which may see it falling towards the $125 or $110 price levels. In the meantime, the prevailing negative market sentiment and the prospect of the approval of its ETFs are influencing its price movement and the broader crypto investment strategy.
Thus, for traders to safely navigate the existing market conditions they should have a clear cryptocurrency investor guide. The bearish indications within the crypto market require current and potential investors to analyze emerging market indications and regulatory environment before making their investment decisions. They should remain abreast with trending crypto news, market developments and changes in the macroeconomic environment. The reason is that the Solana forecast is based on these factors.
Conclusion
Since the beginning of July, the Solana market was bearish due to the current broader crypto market conditions. Nevertheless, the prospect of the approval of spot SOL ETFs has injected Optimism in the market. Based on the current Solana forecast its price may rise towards $170 in the medium to long term time frame.
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