SOL hits $161 after ETF News – Is it just hype?

The key takeaways

• Initial excitement was generated by the launch of Solana ETF with stake, but demand from institutions remains low.

• A sustained price rise is unlikely due to ongoing SOL unlocked, DApp sale-offs and low network traffic.

Solana’s native token SOLSOLThe price of the Solana Exchange-Traded Fund (ETF), which will feature staking, rose 7% Monday following confirmation. The traders speculated that this news could boost institutional demand, and push SOL’s price over $200.

SOL first rallied up to $161 but then retreated to $157. That’s a 4% increase from just 24 hours earlier. REX Shares, an ETF provider, partnered with Osprey Funds in order to create a C-corporation that is taxable. bypassing the typical US Securities and Exchange Commission Approval process. The standard Bitcoin is not the case here.BTCEtherETHSpot ETFs are available in the United States.

This allows for an easier and faster launch. It is also a structure that energy infrastructure partnerships use. It differs, however, from other cryptocurrency ETFs when it comes to tax efficiency. The REX-Osprey SOL+ Staking ETF is taxed at the investor and corporate levels.

SOL investors reevaluated their expectations following an initial rush of excitement. Grayscale’s Solana Trust, which has been trading for more than two years, only manages about $75 million of assets.

As a comparison, Grayscale Ethereum Trust One month prior to the launch of spot Ethereum ETF, in July 2024, (ETHE), held $10 billion under management. The large gap between the two prices indicates that institutional demand, regardless of its staking capabilities, is unlikely to significantly impact SOL’s value.

SOL’s price is limited by competition, staking and DApp buying

This effect may be negated by Solana’s first mover advantage. SOL staking unlocks Selling pressure is generated by some Solana decentralized applications. According to DefiLlama about $585 million of SOL worth will be unlocked over the next 2 months from staking.

Some of Solana’s most popular DApps regularly sell their SOL. Pump, for example, reported Onchain Lens, sold over $400 million of SOL worth to exchanges by 2025.

The activity can explain the fact that SOL has largely matched its competitors ETH, BNB and despite all of their bullish ETF-related news over a period of 30 days.

This indicator provides a good indication of the traders’ position. The SOL futures funding rate can rise above 10% annually when the demand for bullish lever is high. In bearish markets, however, funding rates are negative because short sellers have to pay to hold their positions.

SOL’s funding rate, despite a gain of 12.5% in four days has not surpassed the 10% neutral threshold. Onchain data shows that network activity has not recovered despite the current $157 price, which is 47% lower than its all-time highest of $295. In spite of the memecoin hype, Solana’s network revenue is down over 90% in comparison to January.

Related: Tokenized stock trading live on Kraken, Bybit and Solana’s DeFi ecosystem

Robinhood was selected as an exemplar of a superhero. Ethereum layer-2 Solana’s ability to compete with Coinbase’s tokenized stock exchange has diminished its appeal for DApps that require high output. Similarly, Coinbase partnered with Shopify The Base network will be introducing onchain payments to the Base layer on 12 June. This is the final step in settling transactions at the Ethereum Base layer.

There is currently little indication that a SOL rally will reach $200 due to the launch of the Solana ETF, as there has been increased competition, and there are few instruments listed by the Solana Trust.

The article does not provide legal advice or investment recommendations and it is intended only for informational purposes. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.