U.S. exchange-traded funds giving investors Solana exposure will struggle to break records, JPMorgan analysts said this week.
More Solana ETFs are expected to hit U.S. markets in the near future as the Securities and Exchange Commission mulls applications, but “fatigue” from investors and a more favorable perception of Ethereum is likely to hinder inflows into the products, researchers wrote in a Wednesday report.
Asset managers have filed a long list of altcoin ETF applications following the roaring success of spot Bitcoin and Ethereum funds, which debuted in the U.S. last year. But the banking giant doesn’t expect the same kind of demand as those funds saw.
“Spot Solana ETFs are less likely to gain significant inflows,” the report said. “Solana is not perceived by investors the same way as Ethereum as the main DeFi/smart contract cryptocurrency.”
It added: “Second, there is likely to be investor fatigue with multiple crypto spot ETFs being launched.”
The report further noted that crypto treasuries—companies that buy assets like Bitcoin and Solana so investors can get exposure via equity—might also divert money away from SOL ETFs. Still, the analysts predicted Solana ETFs could “potentially see around $1.5 billion of net inflows during their first year.”
Investors threw nearly $36 billion at the U.S. spot Bitcoin ETFs in inflows in their first year, while their Ethereum counterparts received $8.7 billion after one year of trading.
Solana ETF Approval Odds Now a Certainty, Eric Balchunas Says
The SEC gave the green light to spot Bitcoin ETFs in January 2024. The funds had the most successful launch in ETF history, and currently manage close to $170 billion in assets.
Ethereum ETFs got off to a slower start following their May 2024 approval, but now collectively manage over $31 billion in assets.
Industry observers are now expecting more altcoin ETFs to get the green light.
The SEC said yes to the first Solana ETF, the Rex-Osprey Solana + Staking ETF, in June, and it received $12 million worth of first-day inflows.
Solana is the crypto network behind the sixth-biggest digital coin, SOL. The Solana blockchain is used for decentralized applications, decentralized finance, meme coins, and more.
It’s seen as a key rival to Ethereum, the network behind ETH, offering cheaper and faster transactions. SOL currently has a market cap of $120 billion, and was recently trading for $220 per coin, according to CoinGecko.