Solana Faces Less Supply Pressure Than Litecoin from Grayscale ETFs
Solana (SOL) is less likely to face supply pressure from Grayscale if the SEC approves altcoin ETFs. Litecoin (LTC) could be more affected, according to a recent report.
Expert Sees Different Investor Reactions to Solana and Litecoin ETFs
Vetle Lunde, Head of Research at K33, said Solana and Litecoin may see different investor responses if altcoin ETFs launch. He suggested a “long SOL, short LTC” trade might be profitable.
Lunde explained that Grayscale’s Solana trust started trading in 2023. It holds only 0.1% of Solana’s supply and has never traded below its net asset value (NAV). This lowers the risk of extra supply flooding the market if it converts to an ETF.
In contrast, Grayscale’s Litecoin trust has a longer history. It traded at big discounts during 2022 and most of 2023. Grayscale owns 2.65% of Litecoin’s supply. This trust could see large outflows if it becomes an ETF.
Lunde said, “We see a long SOL, short LTC trade as attractive after ETF launches, assuming they occur around the same time. Given LTC’s history of sharp reactions to positive news, we’ll likely wait a few days post-launch before acting.”
SEC ETF Decisions and Market Impact
- Grayscale’s Bitcoin and Ethereum trusts faced outflows during their ETF launches last year.
- Other products helped balance these outflows.
- For Litecoin ETFs, only three issuers have filed, including Grayscale, Canary Capital, and CoinShares.
- This means fewer issuers can offset potential outflows for Litecoin ETFs.
The SEC recently approved generic listing standards for crypto ETFs. It is expected to decide on Solana and Litecoin ETF filings in early October. Decisions on other funds may follow later that month.
Currently, Solana trades near $210, down 2% in 24 hours. Litecoin trades around $107, up 0.1% in the same period.
