Key facts: Despite high expectations, SOL fails to «turn the game around.» The approval of Ethereum ETFs benefits the cryptocurrency created by Vitalik Buterin. Every cryptocurrency bull cycle has had its “super classics.” Currently, we are seeing a great rivalry between two cryptocurrencies specialized in smart contracts: solana (SOL) and ether (ETH), native token of the Ethereum network. Until now, the second has been prevailing. SOL has seen its price (measured in ETH) retrace from 0.058 ETH to 0.038 ETH in the last 3 months, which represents a drop of 34%, marking its lowest level in this period. Despite the initial optimism, SOL has not managed to rally as seen in the following TradingView chart.
SOL price measured in ETH. Source: TradingView. The main reason behind SOL's pullback could be the arrival of Ethereum spot ETFs on the stock market which is expected to occur sometime between July and September in the United States. These financial instruments could elevate ETH to a higher status, differentiating it from SOL and other altcoins. It is anticipated that the arrival of funds drive a migration of investment capital from other alternative cryptocurrencies to ETH. The arrival of ETH-based ETFs could redefine the cryptocurrency landscape, placing it in a dominant position. Speculation around this event could lead investors to prefer ETH over SOL, which would explain the latter's decline over the last three months as measured in ETH, as Investors are looking for more stable alternatives (regulatory speaking) and with greater potential. Ilan Solot, co-head of digital assets at Marex Solutions, anticipates that the ETH move could be just the beginning. “There could be waves of short covering as no one would want to be short ETH during an ETF approval,” he says. However, the future is not set in stone. The arrival of Ethereum ETFs could open the doors to the emergence of exchange-traded products for other cryptocurrencies, especially those that compete directly with ETH like SOL does. The American company Bernstein Research believes that SOL could be the next to have a cash ETF, as reported by BitcoinDynamic. However, the Solana development organization will have to overcome an important obstacle and that is the United States Securities and Exchange Commission (SEC), which has classified SOL as a security. which could make it difficult to approve an ETF.
SOL “Extreme Volatility” Warning
The trader who identifies himself as «smartestmoney» on social network X, warns about the risks of investing in Solana, highlighting its «extreme volatility.» In his message he criticizes the investment culture in “cultural currencies” like SOL, focused on maximizing short-term value extraction, at the expense of retail investors. The trader points out that venture investors have acquired large quantities of SOL at low prices and now They promote the idea that the cryptocurrency could reach $1,000, with the aim of selling it at inflated prices to retailers. Smartestmoney reminds that the same volatility that allowed quick profits with meme cryptocurrencies (popular on the Solana network) could also lead to sudden losses. That is why the trader suggests investors consider switching to ETH before the “horde of retailers” rush in, implying that ETH could be a more stable and secure investment right now.