25th November 2024 > > SOL ETFs and four key demands.

tl;dr

Spot SOL ETFs move one step closer as the Gensler effect dissipates. The crypto industry sets out some key demands for the incoming US administration.

Market Snap

Market Wrap

A weekend dip below $96k took out $500mm of leveraged positions. Despite this shake-out of some over-enthusiastic longs, funding rates remain elevated across the board. A deeper albeit temporary correction to reset the perpetual futures market would be the healthy option, but with the ETF buying starting up again in a few hours’ time, BTC has reversed course and made back most of the weekend weakness.

XLM continues on its stellar run, up from 9c a month ago to just over 60c on Saturday. The CC Treasury has been selling into that strength with internal price targets of 45c and 60c triggering automatic sells of part of the stash. Remember – it is never bad to bank profits on the way up.

Curious Cryptos’ meme corner

Curious Cryptos’ Commentary – Solana ETF

Equity exchange Cboe BZX has filed four applications for spot SOL ETFs on behalf of VanEck, 21Shares, Bitwise Asset Management, and Canary Capital.

This stage of the process – submission of form S-1 – has apparently been received positively by the SEC, who have engaged in discussion with Cboe BZX. Gensler’s malign and misguided influence has already withered and waned. Matthew Sigel, head of digital asset research, wastes no time in getting a dig in at Gensler:

"It was Gary Gensler's SEC that broke with long-standing tradition with the rules-guided process and regulated through enforcement. Going back to usual disclosure-based system would create scope for more innovation in this space... I think the odds are overwhelmingly high that there will be a Solana ETF trading by the end of next year."

Austin Reid, Global Head of Revenue & Business at FalconX predicts an even brighter future ahead:

“The launch of Solana ETFs will be a massive milestone for the SOL ecosystem + also signals a major shift for the entire crypto industry. Beyond new single-asset funds, regulatory clarity will pave the way for actively managed products + new basket ETFs - both of which will unlock new channels of institutional liquidity.”

We do like the sound of that.

It is perhaps in anticipation of a crypto-friendly SEC that SOL reached a new ATH just shy of $264 on Saturday, a near 5x increase in the last year.

SOL, like ETH, uses the PoS consensus mechanism allowing holders to stake and earn annual rewards of around 5%-6% currently. Once the ETF issuers are given the go-ahead to stake the underlying assets, and pass on the staking rewards to investors, this potential SOL ETF and the current ETH ETFs will look a lot more attractive. With a market cap for SOL of just $120bn and ETH at $400bn compared to BTC at nearly $2 TRILLION, an influx of institutional money will have an outsized effect on the price of both SOL and ETH.

Curious Cryptos’ Commentary – Blockchain Association

A lobbying organisation on behalf of the crypto industry has written to Trump and Congress setting out its thoughts on what should happen next:

https://theblockchainassociation.org/wp-content/uploads/2024/11/Priorities-for-First-100-Days.pdf

CEO Kristin Smith is spot on with four out of his five suggestions for immediate steps to take:

• Establish a crypto regulatory framework. 

• End the debanking of crypto and blockchain technology companies. 

• Appoint a new SEC chair and roll back SAB 121. 

• Appoint new leadership at the Treasury Department and IRS. 

• Develop a crypto advisory council to work with Congress and federal regulatory agencies.

The last one sounds to me like adding an additional layer of bureaucracy for no purpose other than adding yet more people to the government payroll, as if there aren’t enough of them already.

Rolling back SAB 121 is the easiest of tasks, and will result in an explosion of crypto activity generated by the TradFi industry finally unleashed and allowed to respond to customer demand for a plethora of crypto products. There are some very exciting times just ahead of us.