On October 30, Canary Capital applied to the U.S. Securities and Exchange Commission (SEC) for a spot in the Solana ETF. The new product is designed to offer exposure to Solana without the need to deal with ‘twisted crypto’ in a traditional brokerage account.
Using the CF Solana Index to track SOL’s real-time price performance, our proposed ETF will be comparable to the CBi21/36 alliance Benchmark. The ETF application is Canary Capital’s third after filing out the fund for XRP and Litecoin, which aligns with its quest to open broader cryptocurrency for investment.
Steven McClurg’s Canary Capital promotes a risk-managed approach to investing in cryptocurrency. The firm does not yet know details on the custodian, or ticker symbol, of the Solana ETF. As shown in the platform’s activity metrics, Canary Capital is interestingly keen on Solana and has been focused on its recent market analysis.
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Solana is ahead of Ethereum and Binance Chain regarding active address share, which Canary highlighted shows growth potential. However, while Solana’s user growth is promising, the crypto could face more regulation hurdles with the SEC over decentralization.
SEC Faces Pressure on Solana ETF Approval
Solana’s relatively centralized nature compared to other networks, such as Ethereum, could add to the challenges of getting SEC approval. Solana has fewer validator nodes than other decentralized networks, and such networks are susceptible to network vulnerabilities and governance.
Analysts think any one or a combination of these will impact the SEC’s decision. At the same time, it reviews whether the unique risks of Solana’s network structure warrant approval for a ‘blockchain’ beyond Bitcoin and Ethereum.
Firms have reason to hope that the SEC will start approving ETFs related to cryptocurrency in the near term but remain cautiously optimistic given that the SEC has also been hesitant to approve cryptocurrencies for Ethereum. This news comes shortly after VanEck and 21Shares filed for Solana ETFs earlier this year (and are still awaiting a decision).
On the flip side, some countries, such as Brazil, have already authorized Solana ETFs, implying that as far as a regulatory stance regarding digital assets is concerned, it’s different elsewhere, including the US. Investors have been warming up to Solana, as evidenced by Canary’s application.
Industry watchers agree that BlackRock’s skittishness on Solana ETFs is one more sign of the problems ahead. But Canary is hopeful and concludes with observations about Solana’s growing market share and user engagement as indicators of a sustainable, growing user base.
Strong Open Interest Signals Solana Bullishness
According to CoinMarketCap, Solana (SOL) is trading at $169.74, down 2.33% over the past 24 hours. The cryptocurrency’s market cap stands at $79.84 billion, reflecting a 2.24% decrease, while its 24-hour trading volume has decreased by 9.07% to $2.67 billion.
These fluctuations suggest mixed sentiment among investors, with Solana retaining its position as the fifth-largest cryptocurrency despite recent declines. Santiment data indicates that Solana’s price and social dominance metrics have shown notable fluctuations recently.
In late October, increased social discussions around Solana coincided with a peak in SOL’s price, hinting at bullish short-term sentiment. Such spikes in social engagement may reflect heightened market interest, potentially influencing broader investor perceptions of Solana’s value.
Meanwhile, CoinGlass data reveals that Solana’s Open Interest (OI)-Weighted Funding Rate has shown a steady positive trend throughout October. This trend suggests strong market confidence in Solana, as traders have predominantly taken long positions on SOL. A high OI-weighted funding rate paired with an upward price trend typically indicates bullish sentiment, though analysts warn that excessive leverage could lead to market corrections.
If approved, Canary Capital’s Solana ETF would offer a regulated avenue for institutional and retail investors to access Solana’s market.
This setup could attract risk-averse investors seeking exposure to Solana’s price movements without holding the actual cryptocurrency. Crypto ETFs like this allow for indirect exposure, providing a simplified alternative to direct crypto investments.
