Solana (SOL) outflows reached an all-time high of $39 million last week, signaling growing concerns within the crypto market. This surge in outflows comes as the prospects for a Solana ETF approval face increasing uncertainty, following the disappearance of related filings from the Cboe website.
Record Solana Outflows Raise Concerns
The $39 million outflow marks the highest on record for Solana investment products, sparking concern across the crypto community. According to CoinShares, this unprecedented outflow is linked to a significant drop in trading volumes, particularly in meme coins, a segment that Solana heavily depends on.
While Solana experienced record outflows, other cryptocurrencies had mixed results. Digital asset investment products as a whole saw modest inflows of $30 million last week. However, the figures varied significantly across different assets and regions. Bitcoin (BTC) led the way, attracting $42 million in inflows, reflecting strong investor confidence in spot Bitcoin ETFs. In contrast, short-Bitcoin ETPs recorded $1 million in outflows for the second consecutive week, suggesting a shift in market sentiment away from betting against BTC.
Ethereum (ETH) saw $4.2 million in inflows, but this number hides significant activity between providers. New entrants into the Ethereum ETF space experienced substantial inflows of $104 million, while Grayscale’s ETH products faced $118 million in outflows.
Uncertainty Clouds SOL ETF Approval
The massive Solana outflows coincide with rising uncertainty about the approval of Solana ETFs. Recently, filings for SOL ETFs by VanEck and 21Shares were removed from the Cboe website, fueling concerns about their regulatory future. This move has sparked speculation about the U.S. Securities and Exchange Commission’s (SEC) stance on these products.
Both companies had initially filed S-1 forms for spot Solana ETFs in late June, following increased clarity on approvals for nine spot Ethereum ETFs by the SEC. However, the SEC did not issue notices of filings for these SOL ETFs, leading to questions about whether the 19b-4 filings were withdrawn or rejected. The 19b-4 filing is a crucial step in the ETF approval process, informing the SEC of proposed rule changes by an exchange.
Scott Johnsson, General Counsel at Van Buren Capital, speculated that SEC Chair Gary Gensler might have informed Cboe that these SOL applications were improperly filed. He suggested that Gensler may not view SOL as a commodity, which could eliminate the need for a formal disapproval order. Nate Geraci, President of ETF Store, also confirmed the removal of the ETF filings and expressed doubt about their approval in the current regulatory environment.
Earlier, Matthew Sigel, VanEck’s Head of Digital Assets Research, criticized U.S. regulators for falling behind other countries like Brazil, which have already approved spot Solana ETFs. He suggested that the U.S. may need a regulatory “soft fork” to move forward with Solana ETF approvals. The recent surge in Solana outflows has only heightened uncertainty, as interest in SOL investment products continues to wane.
