Market maker GSR is thinking big on Solana (SOL), which it expects to outperform Bitcoin (BTC). GSR analysts believe Solana distinguishes itself from others due to its superior technology and changing U.S. political environment.
In a note published Thursday, GSR highlighted reasons why a spot Solana ETF could be next, following the launch of spot Bitcoin ETFs in January and the launch of spot Ethereum ETFs later this summer. The note came on the same day that fund manager VanEck filed for an ETF that would track the price of Solana.
GSR analysts noted that change has already begun with Donald Trump's new support for the crypto industry, causing Democrats to soften their stance on digital assets in a tight election year. “While the current legislative and regulatory structure is unlikely to adopt rules enabling the launch of numerous spot digital asset ETFs, a Trump administration and liberal SEC commissioner could do exactly that,” they wrote.
According to GSR's scorecard for identifying such features, Solana's market demand and decentralization have enabled it to join Bitcoin and Ethereum in the spot ETF market. Ethereum came in first by a large margin, followed by Solana, which beat out the next closest digital asset, Near, by a large margin.
GSR also wrote three key reasons why Solana's technology gives it a competitive advantage:
- Proof of History: Just like cell towers transmit alternately to avoid noise, proof of history offers huge speed and scalability benefits by allowing validators to produce blocks when their turn comes up, without the network needing to first agree on the current block.
- Parallel Processing: According to GSR, Solana not only enables parallel process processing to significantly increase throughput, but also taps into the main source of improvement in computing speeds; today most gains come from adding more cores rather than improving the performance of each one.
- High Hardware and Bandwidth Requirements: GSR is Solana's historically high hardware and bandwidth requirements, optimizing speed and security at the expense of decentralization, but “as costs drop over time, perhaps the solution to truly solving the blockchain trilemma and eventually syncing global state at lightning speed” “It is naturally positioned to benefit from being the first system to realize its vision,” he said.
As for the impact on SOL, GSR noted that BTC rose from $27,000 in October (i.e., when market participants “started to attribute a real possibility” to US spot ETF approval) to its current price of around $63,000, which represents a 2.3x increase.
According to the GSR analysis, “Solana could increase by 1.4 times in the bear flows scenario, 3.4 times in the base scenario and 8.9 times in the rose-tinted glasses scenario”.
*This is not investment advice.