Grayscale Research Chief Forecasts $5B Inflows for US Solana Spot ETFs

Zach Pandl, head of research at Grayscale Investments, believes Solana exchange-traded funds (ETFs) could soon rival the success of Bitcoin and Ethereum investment products.

Pandl made this prediction following the launch of Grayscale Solana ETF (GSOL) and Bitwise Solana ETF (BSOL) this week. Both products mark a new chapter for the fast-growing market of crypto-based investment vehicles.

Despite being a day behind, analysts described GSOL’s early performance as strong, given the increasingly crowded market. Pandl said Grayscale expects Solana ETFs to become multi-billion-dollar businesses as investor interest broadens.

From Niche to Mainstream: Crypto ETFs Gain Ground

Exchange-traded products (ETPs) allow investors to obtain cryptocurrency exposure through traditional brokerage and retirement accounts. This structure enables participation in the asset class without requiring direct ownership of digital tokens.

According to the Investment Company Institute, U.S.-listed ETFs held over $10 trillion in assets by the end of 2024, accounting for 26% of all managed assets.

Crypto ETFs represent only a small fraction of this total, but their growth has been rapid. Bitcoin ETPs currently manage $149 billion, while Ethereum products hold $26 billion, across roughly 20 funds.

Regulation Remains a Concern

Not all financial institutions share Grayscale’s optimism. Earlier this week, Charles Schwab warned that crypto remains lightly regulated, even as the U.S. Securities and Exchange Commission (SEC) continues to approve new ETPs.

“The SEC’s hands-off stance means higher risk for investors,” the firm said, noting that the crypto sector lacks the oversight applied to equities and bonds.

GSOL Evolution: From Trust to ETF

Grayscale’s Solana product, GSOL, originally launched as a private trust in 2021, holding around $100 million in Solana tokens.

Its conversion to an ETF this week makes the fund more flexible, allowing it to trade closer to the actual value of its holdings. The shift eliminates the large premiums and discounts often seen in closed-end crypto trusts.

Pandl said the conversion opens access to a broader range of investors while improving liquidity and pricing transparency.

Competition and Diversification Ahead

Solana’s debut comes as Hedera and Litecoin ETFs also enter the market, though their inflows remain modest. More than a dozen additional crypto-based funds are expected to seek approval soon.

Pandl expects investor interest to gradually shift toward diversified crypto ETPs, which provide exposure to multiple tokens simultaneously.

“Many investors will prefer simpler, diversified options that reduce the complexity of evaluating each token,” he said.

Staking Adds a New Source of Yield

Unlike Bitcoin ETFs, Solana investment products can offer staking rewards, a feature unique to proof-of-stake networks. By locking Solana tokens to help secure the blockchain, investors can earn an estimated annual yield of 5.7%, according to Solana Compass.

Pandl confirmed that GSOL will distribute 77% of staking rewards to its holders, calling it “a game changer for crypto demand.” He described staking as a new income stream that could help investors diversify portfolio returns.

Distinct Roles for Solana and Ethereum

Pandl said Solana and Ethereum will likely develop distinct roles in the digital asset ecosystem, despite both being smart contract platforms. He pointed to growing adoption of stablecoins and tokenized assets as key drivers of institutional interest.

“They differ in design, and that gives each blockchain its own lane,” Pandl explained. “Investors can benefit from holding both as part of a balanced crypto strategy.”