Solana (SOL) has recorded 6% gains following the VanEck application to file for a Spot Solana ETF, rising off the downtrend of the past few days. This has seen SOL surge to trade at $144.31, though still well below the all-time high level it hit at $260.06. The recent buzz on Solana ETF has been causing very high speculation and much-awaited rumors among the crypto community.
The spike in the price of Solana follows the announcement of a filing by VanEck with the United States Security and Exchange Commission for a Spot Solana ETF. This is the first official application for an ETF tracking Solana in the U.S. and has set off much optimism in the investor and market analysis circles.
Expectations were rife that other big firms like BlackRock, Fidelity, or Grayscale could also soon enter the race and increase market confidence.
Apart from the VanEck filing, another Canadian investment firm, 3iQ Corp, has filed a preliminary prospectus for a Solana Fund (QSOL). This has contributed to the momentum of the hype regarding Solana ETFs, although the route to approval looks highly testing. With the strict regulatory regime imposed by the SEC, the same regulator that has been at the root of multiple issues in terms of approving the Ethereum ETFs, it is clear that Solana is bound to face similar hurdles.
Despite this rally, Solana's price is still recouping losses of 13% in the last month. However, there is a strong signal that SOL has recovered, with the 24-hour trading volume up by 112% to $3,127,793,658. Technical indicators present a strong buying zone for Solana, where most of the time frames give a buy signal. However, the MACD and Stochastic RSI point to a possible overbuying and hence point toward a short pullback.
Several analysts have pitched various price targets for Solana following the successful approval of the Solana ETF. Some of those predictions are very conservative and set the near-term target at as low as $188, while some are wildly optimistic.
For instance, GSR Markets has set a "blue sky scenario" where Solana's price could increase to over $1,320, nine times more. In this optimistic scenario, Solana ETFs would capture 14% of the flows Bitcoin ETFs have been able to get since launch.
Despite all the optimism, regulatory challenges remain a daunting hurdle for the go-ahead of a Spot Solana ETF. The SEC has labeled SOL as a security in the recent lawsuits against Binance and Coinbase, making approval tricky.
Bloomberg ETF analyst Eric Balchunas has said that a change in the current U.S. presidential administration and SEC leadership may be needed to get a Solana ETF approved. In addition, price predictions could have been further tempered by the fact that the Solana ETFs include staking rewards. The lingering question remains about whether staking approval will be given since this was excluded from the approved Spot Ether ETFs.