GSOL Investors Not Buying Bold Analyst Prediction

Top crypto trader predicts “violent breakout” for popular cryptocurrency.

kent
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Research Lead
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Reviewed by: etf.com Staff
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Edited by: James Rubin

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.  

Kent Thune is Research Lead for etf.com, focusing on educational content, thought leadership, content management and search engine optimization. Before joining etf.com, he wrote for numerous investment websites, including Seeking Alpha and Kiplinger. 

 

Kent holds a Master of Business Administration (MBA) degree and is a practicing Certified Financial Planner (CFP®) with 25 years of experience managing investments, guiding clients through some of the worst economic and market environments in U.S. history. He has also served as an adjunct professor, teaching classes for The College of Charleston and Trident Technical College on the topics of retirement planning, business finance, and entrepreneurship. 

 

Kent founded a registered investment advisory firm in 2006 and is based in Hilton Head Island, SC, where he lives with his wife and two sons. Outside of work, Kent enjoys spending time with his family, playing guitar, and working on his philosophy book, which he plans to publish in the coming year.