Solana’s potential ETF approval could skyrocket its market presence, leveraging its high-speed, low-cost transactions for mainstream adoption.
The US spot Bitcoin exchange-traded fund (ETF) market continues to gain momentum, with net inflows for eight days in a row as of May 20, 2024. This positive trend comes amidst growing anticipation for the approval of spot Ether ETFs, which could lead to similar products for other cryptocurrencies like Solana (SOL).
Bitcoin ETFs Attract $153M
Photo: SoSoValue
Data from SoSo Value shows that spot Bitcoin ETFs attracted $153.91 million on Wednesday. BlackRock’s iShares Bitcoin Trust (IBIT) led with $92 million inflows. Fidelity Digital Assets’ Wise Origin Bitcoin ETF followed with $75 million, while Ark Invest and 21Shares Bitcoin ETF had $3 million in inflows.
However, Grayscale’s industry-leading Bitcoin Investment Trust (GBTC) experienced net outflows of $16 million on Wednesday. Seven other spot Bitcoin ETFs from Bitwise, VanEck, and others maintained neutral positions with zero net flows.
Despite this minor setback, the overall trend for spot Bitcoin ETFs remains positive. Since their January 2024 launch, these funds have gained $13.33 billion in net inflows, showing investor confidence in this new asset class. The cumulative trading volume exceeds $267 billion for the spot Bitcoin ETFs, indicating a highly active market.
FIT21 Act Spurs Spot Bitcoin ETFs
The positive sentiment around spot Bitcoin ETFs coincides with the recent passing of the Financial Innovation and Technology for the 21st Century Act (FIT21) by the US House of Representatives. This Republican-led bill aims to establish a legal framework for the digital asset industry, granting the Commodity Futures Trading Commission (CFTC) more authority to oversee crypto assets as “digital commodities.”
While the bill is a significant step towards crypto regulation, it has drawn criticism from both parties. Rep. Nancy Pelosi (D-CA) expressed concerns that the current version of FIT21 lacks enough consumer protection measures and needs further refinement. Securities and Exchange Commission (SEC) Chair Gary Gensler agreed, arguing that the bill puts digital asset investors at risk.
The US crypto market now eagerly awaits the potential approval of spot Ether ETFs. The SEC reportedly requested amendments and refiling of 19b-4 forms from exchanges earlier this week, a move often seen as a precursor to approval. Cboe BZX submitted revised forms for five spot Ether ETFs, while Nasdaq filed the amended form for BlackRock’s offering.
Solana’s ETF Prospects
BKCM CEO Brian Kelly recently speculated that Solana could be the next cryptocurrency to receive a spot ETF. While specific details and timelines remain unclear, the possibility highlights Solana’s growing prominence in the market.
Historically, the approval of a spot Bitcoin ETF led to a 12% surge in the ETH/BTC trading pair within a week. Daniel Yan, co-founder of Matrixport, suggests that Solana might experience similar gains if a spot Ether ETF is greenlit.
Solana’s strength lies in its high-speed, low-cost transactions, which attract significant investor interest. A spot ETF could further enhance its visibility and mainstream adoption. The confluence of positive developments (sustained inflows into spot Bitcoin ETFs, the passing of the FIT21 bill, and the potential approval of spot Ether ETFs) paints a promising picture for the future of cryptocurrency.
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