GSOL Investors Not Buying Bold Analyst Prediction

The Grayscale Solana Trust (GSOL), a closed end fund that tracks the performance of Solana (SOL), dipped Wednesday despite a bullish prediction by a popular cryptocurrency markets analyst for the underlying asset.

GSOL recently fell more than 6%, although the fund has skyrocketed by nearly 1,700% in its brief, one-year history amid growing optimism about cryptocurrency investments. SOL, the token of the Solana smart contracts blockchain, tumbled more than 10% on Wednesday but has risen more than 600% since last April.  

On Monday, pseudonymous analyst Bluntz told his 256,800 followers on the social media platform X that SOL appears to be setting up a bullish technical pattern. “SOL gearing up for a violent breakout here in my opinion,” said the closely watched cryptocurrency trader. 

The bold prediction came ahead of Tuesday’s news that the bankruptcy estate of the failed FTX cryptocurrency exchange plans to auction off another unspecified number of Solana tokens this week, according to Bloomberg. It also coincided with cryptocurrency-focused asset manager Grayscale’s filing of an S-3 registration with the Securities and Exchange Commission to convert its Grayscale Ethereum Trust to a spot ether exchange-traded fund.

Is a Solana Spot ETF Coming? 

In addition to Grayscale, a number of firms, including BlackRock Inc., Fidelity Investments, and ARK Invest, are vying to roll out their own versions of spot Ethereum ETFs after the historic success of spot bitcoin funds since their approval by the SEC in mid-January. The fate of these ETFs based on the price of Ethereum’s ether token remains uncertain after the agency delayed making a decision about them earlier this spring.  

Still, some analysts have speculated that Solana, a smart contracts competitor to Ethereum and the fifth largest cryptocurrency with a $69 billion market capitalization, may be next in line for a spot ETF should a spot Ethereum fund win approval. 

What Is Solana?

Solana is a public blockchain platform launched by Solana Labs in 2020 that aims to address some of the limitations of earlier blockchain technologies, particularly inscalability and transaction speed. Here's a deeper dive into what Solana offers: 

Solana, like Ethereum, is a programmable blockchain. This means it allows developers to build decentralized applications (dApps) on top of its platform. These dApps can range from DeFi (decentralized finance) protocols to non-fungible token (NFT) marketplaces. 

How Does GSOL Work?

GSOL, or Grayscale Solana Trust, is a security that allows investors to gain exposure to the Solana (SOL) cryptocurrency without directly owning it. GSOL is a closed end fund, or CEF, which trades on the secondary market like an exchange-traded fund (ETF), although with a few different qualities. 

For example, a CEF, unlike ETFs, can’t create or redeem shares on a daily basis. Instead, CEFs come to market through an IPO with a fixed number of shares. Like ETFs, CEFs trade intraday on an exchange, which means CEFs may trade at premiums or discounts to their net asset value (NAV). 

By investing in GSOL shares, you're essentially investing in a pool of Solana (SOL) tokens held by Grayscale. The value of your GSOL shares fluctuates based on SOL’s price. 

GSOL can be an interesting option for investors seeking exposure to Solana without the complexities of managing cryptocurrency directly. However, carefully consider the limitations mentioned above and ensure it aligns with your investment goals and risk tolerance.