SEC's attitude turns friendly, Solana ETF is expected to be approved or become a good investment opportunity.

On June 18, the digital asset brokerage and research firm K33 stated that as the SEC’s attitude towards Crypto Assets becomes friendlier, there may be approval for the launch of new Spot alts ETFs in the coming months, which will provide investors with some compelling long and short strategy opportunities.

Currently, eight institutions have submitted applications for a Spot Solana (SOL) ETF. The SEC has proactively contacted asset management companies, requesting them to include staking clauses in their updated application documents. K33 analyst Lunde pointed out that this indicates an increasing level of regulatory involvement and enhances the possibility that Ethereum and Solana ETFs may include staking features. In addition to Solana, there are also ETF applications for other Crypto Assets such as LTC, XRP, and DOGE.

Lunde mentioned that when Bitcoin and Ethereum ETFs were listed, there was a so-called “Grayscale Effect”—that is, after Grayscale’s trust funds were converted to ETFs, a large amount of holdings flooded the market, resulting in more than 50% of the assets under management being sold off within 200 days. However, the situation for potential new ETF assets is different for Grayscale. Unlike XRP and Dogecoin, Grayscale’s Solana and Litecoin trusts have already been traded on the public market, so they can serve as a more direct reference.

Lunde said that Grayscale’s Solana trust, which was launched in 2023, has never traded at a discount and only holds 0.1% of the total SOL supply, so the risk of a market sell-off is low. In contrast, Grayscale’s Litecoin Trust regularly trades at a discount, holding 2.65% of the total LTC supply, and is again facing discount pressure after the recent physical subscription. In addition, only two institutions, Canary Capital and CoinShares, have applied for the Litecoin ETF at the moment, which means that market liquidity may be low, making it difficult to absorb potential selling pressure.

Lunde believes that the structure of the Solana ETF is clearer, while the Litecoin product may face capital outflows similar to GBTC and ETHE after conversion. Therefore, a trading strategy that goes long on SOL while shorting LTC could be attractive, especially in the case of both being listed simultaneously.