The exchange-traded fund (ETF) based on Solana (SOL) debuted on the market on October 28th and has since shown impressive performance, with 17 consecutive days of inflows.
Since its release, These Solana financial products raised $470 millionas shown below:
The flip side of the Solana ETF is a spot fund of Bitcoin (BTC) and Ethereum’s native cryptocurrency, Ether (ETH), colored red.
Bitcoin fund records capital outflow for 6th consecutive daywith over $1.9 billion in withdrawals.
Meanwhile, the Ether ETF has been in red for seven consecutive days, with outflows exceeding $1 billion.
Please note that the performance of these financial instruments has a direct impact on the underlying asset. As CriptoNoticias explained, Companies managing ETFs must purchase cryptocurrencies to back their activities.
Therefore, when the demand for SOLANA ETF increases, these companies enter the market to buy SOL. Otherwise, the surplus will be sold, putting downward pressure on prices.
Now, when the SOL fund accumulates 17 days of profits; Why is this performance not reflected in the price of cryptocurrencies?
What’s going on with Solana?
Before proceeding, the first thing to note is that SOL is trading at $140, 52% below its all-time high (ATH) From $293.
The following graph shows the price of SOL since the ETF’s inception.
Solana-based ETFs have shown strong performance, but the red markets have had limited inflows relative to the underlying market size.
Let’s take a look at the inflows that Solana ETF has accumulated over 17 days. A total of $470 million. very less compared to Amount of funds transferred by BTC and ETH funds.
To put this in perspective, only the BlackRock-managed iShares Bitcoin Trust (IBIT) fund recorded the largest daily outflows since its market debut in January 2024. On Tuesday, November 18th, IBIT ended the day with over $523 million in withdrawals.
This is the difference in size that explains why, despite demand for the SOLANA ETF, the impact on SOL prices has been relatively small.
Also, since the SOL ETF is recent and small in size, There are limits to its ability to generate sustained bullish pressure. On the other hand, BTC and ETH ETFs can have a significant price impact when they record large flows.
It is only a matter of time before the Solana ETF becomes even more relevant and large, and its actions begin to have an even greater impact on crypto prices.
