Grayscale Solana Trust Trading At A Mega 650% Premium: What’s Going On?

    Solana is in red for now, but the coin is one of the top performers. In the last year of trading, SOL, the native currency of the Solana ecosystem, rose by over 15X, quickly moving up the crypto ranking to fifth, flipping XRP, Cardano, and even top meme coins like Dogecoin.

    GSOL Trading At A 650% Premium

    There could be more for SOL in the coming few weeks. Data shows that the Grayscale Solana Trust (GSOL) is trading at a 650% Net Asset Value (NAV) premium.

    According to Jamie Coutts, the Chief Crypto Analyst at Real Vision, the spike in the NAV premium follows the wave of spot Solana exchange-traded funds (ETFs) in the United States and Canada.

    GSOL trading at a premium | Source: @Jamie1Coutts via X
    GSOL trading at a premium | Source: @Jamie1Coutts via X

    To understand what’s going on, the GSOL NAV generally represents the total value of all SOL held by the trust, divided by the number of outstanding GSOL shares. If GSOL trades higher or lower than the NAV, it would be selling at a discount or a huge premium.

    When GSOL trades higher than the NAV, it is available at a premium, meaning people are willing to pay higher for the underlying asset, in this case, SOL.

    GSOL is now available at a premium partly because of the limited supply. Only a few shares are listed for trading, unlike the free trading SOL available on multiple crypto exchanges like Binance or Coinbase.

    Accordingly, institutions, expecting prices to spike in the coming months, might have to scramble with others to get exposure to SOL via GSOL, driving premiums higher.

    Eyes On Spot Solana ETF Applications In The US And Canada

    Anticipation is high that Solana might outperform Bitcoin and Ethereum in the coming months, stretching gains of Q1 2024. The preview follows the decision by VanEck and 21Shares to file for spot Solana exchange-traded funds (ETFs) with the United States Securities and Exchange Commission (SEC) in late June.

    In their filing, VanEck, through its Head of Digital Assets Research, Matthew Sigel, said their product will aim to take advantage of Solana’s decentralization, utility, and economic viability. The executive also added that SOL qualifies to be a commodity like Bitcoin.

    Solana price trending lower on the daily chart | Source: SOLUSDT on Binance, TradingView
    Solana price trending lower on the daily chart | Source: SOLUSDT on Binance, TradingView

    Even with this application, the odds of the spot Solana ETF being approved by the strict agency remain slim. Unlike Bitcoin and Ethereum, whose futures products are available on CME, SOL is not listed on the bourse. At the same time, the United States SEC cited SOL as one of the multiple unregistered securities when they sued Binance and Coinbase.

    Feature image from Canva, chart from TradingView

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