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The Solana ETF filing by VanEck and 21Shares created a buzz of optimism in the cryptocurrency market. However, despite this promising announcement, the enthusiasm quickly faded. The excitement was short-lived, leaving many observers puzzled. What dampened the momentum?
Mixed Reactions to SOL Crypto's ETF Application
The recent announcement by Solana, VanEck and 21Shares of the first spot ETF application for SOL cryptocurrency failed to generate the expected enthusiasm in the market. Although the price of SOL cryptocurrency initially rose by 6%, the overall impact was limited. According to a recent analysis by blockchain analytics firm Kaiko, the open balance in the derivatives market remains 20% below early June levels.
The SOL crypto asset recorded a positive cumulative trading volume delta (CVD) of $29 million due to large purchases on Coinbase, but failed to maintain momentum. SOL's volume-weighted funding rate briefly rose on June 27 but then returned to neutral levels, indicating a lack of sustained bullish demand, meaning the initial enthusiasm was not enough to energize the market on a sustained basis.
Reasons for market indifference
Several factors explain this lukewarm reaction. On the one hand, Solana’s derivatives market remains too small to attract significant interest. On the other hand, regulatory challenges are weighing on investor optimism, especially since Solana crypto assets have been mentioned in multiple SEC lawsuits.
At the same time, traditional investors appear to be increasingly attracted to combined ETFs that offer a diversified portfolio of Bitcoin (BTC) and Ethereum (ETH), such as those recently filed by Hashdex and Hashkey. According to Kaico's Value-at-Risk (VaR) tool, an equal-weighted BTC/ETH portfolio shows a 58% return in 2024 compared to 20.6% in 2021, offering a more attractive risk-return profile.
The expectations expressed in the Solana ETF filing have not yet been fully met. Regulatory challenges and the small size of the derivatives market, as well as the growing appeal of BTC/ETH mixed ETFs, are the reasons for the mixed reaction. Investors should continue to analyze the market to predict market movements and adjust their strategies accordingly.
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He holds a degree from Sciences Po Toulouse and is a Blockchain Certified Consultant by Alyra. In 2019, he returned to the Cointribune venture, working to expand the potential of blockchain to multiple sectors of the economy and to educate and inform the public about the constantly evolving ecosystem. My objective is to gain a deeper understanding of blockchain and seize the opportunities it offers. I am committed to providing an objective analysis of the current situation, elucidating market trends, communicating the latest technological innovations and gauging the prospects of economic and social challenges in this revolution of the market.
Disclaimer
The views, thoughts and opinions expressed in this article are those of the author and should not be taken as investment advice. Please conduct your own research before making any investment decisions.
