Limited Demand Expected for Solana ETFs, According to Research Insights

Recent findings suggest that there may be insufficient interest in Solana exchange-traded funds (ETFs) among investors in the United States. Katalin Tischhauser, the head of investment research at Sygnum Bank, has raised concerns about the uptake of such investment vehicles.

Observations on Grayscale’s Solana Fund

Tischhauser pointed to the low investor flows into the Grayscale Solana Trust (GSOL), which is a private fund managed by Grayscale, as an early indicator of weak demand for Solana (SOL) investment opportunities.

• Assets under management for GSOL are reported to be below $70 million.
• In contrast, the Grayscale Bitcoin Trust (GBTC) managed around $30 billion prior to its conversion to an ETF earlier this year.

Tischhauser attributes the modest AUM figures to the lesser recognition of Solana compared to Bitcoin, stating:

“The small AUM reflects the relative name recognition of Solana versus Bitcoin.”

Market Dynamics and Premium Insights

Interestingly, shares of GSOL are trading at a substantial premium to their net asset value (NAV), exceeding seven times as of mid-August. NAV represents the underlying value of SOL per share within the fund.

Tischhauser notes:

“The high premium suggests some demand, but it’s not the kind of demand that will significantly impact the market.”

Comparative Success of Bitcoin and Ethereum ETFs

In contrast, Bitcoin (BTC) and Ethereum (ETH) ETFs have experienced record inflows in 2024, currently holding approximately $63 billion in collective assets under management. According to data from Morningstar Inc., this trend signals substantial adoption within the cryptocurrency sector.

Future of Solana ETFs

The conversations regarding potential Solana ETF launches are growing, with various asset management firms expressing interest, including:

• Franklin Templeton
• VanEck
• 21Shares

However, BlackRock, the largest ETF manager by assets under management, has indicated it has no plans to launch a Solana ETF, citing minimal interest from its clients.

Conclusion

Tischhauser concludes that while smaller issuers may find financial rewards in launching these products, the overall impact on the broader crypto market is likely to remain limited.