Solana Drops 5% Following $69 Million ETF Launch: Profit-taking Affects SOL Price

Solana Drops 5% Following $69 Million ETF Launch: Profit-taking Affects SOL Price

After the launch of the highly anticipated Bitwise Solana Staking ETF (BSOL), Solana's native token, SOL, experienced a 5% decline in value. While the ETF attracted $69 million in initial investment, profit-taking among traders influenced the price drop. Analysts caution that if Bitwise's strategy to stake all tokens becomes problematic during significant redemptions, it may lead to further liquidity issues.

Key Takeaways

The Bitwise Solana Staking ETF (BSOL) attracted $69.45 million in its first day but prompted traders to take profits, resulting in a 5% decrease in SOL's price.
Bitwise intends to stake all SOL within the fund, which could create tighter liquidity during substantial redemptions.
The dip in SOL’s price post-launch reflects classic market behavior: "buy the rumor, sell the news."
Questions linger about whether this price drop is a short-term adjustment or the beginning of a more extensive market cooldown.

Strong Inflows, but Redemption Risks Ahead

The BSOL ETF launched successfully yesterday, drawing in approximately $69.45 million on its first day, which increased its total assets to around $289 million. This amount represents nearly 0.27% of Solana's total market capitalization.

Source: X

While the ETF’s launch demonstrates that Solana remains appealing to investors, ETF expert Nate Geraci pointed out a potential structural risk. Bitwise's plan to stake 100% of the SOL held in the fund could lead to liquidity constraints during significant redemption events.

According to Bitwise's filing, if delays in unstaking occur, the trust may exchange "Moderately Liquid Solana" (pending cooldown) for "Highly Liquid Solana" through third-party trades. This process might slightly lower the fund's net asset value during periods of high redemptions.

SOL Price Declines Following ETF Launch

Shortly after the BSOL ETF went live, the price of SOL fell to approximately $194, marking a nearly 5% decrease from its highs before the launch.

SOL Price Chart

Analysis of the one-hour price chart revealed significant selling pressure, with large red candles and noticeable spikes in trading volume indicating that traders were securing profits. The Relative Strength Index (RSI) reflected weakened momentum, while the On-Balance Volume (OBV) showed reduced buying activity. Even with strong ETF inflows, SOL's short-term outlook appears uncertain as traders prioritize locking in early profits.

Increasing Leverage Amid Cautious Sentiment

Following the ETF launch, Solana's Open Interest rose to $4.36 billion, showing that traders are reopening leveraged positions. However, the average Funding Rate remained negative at -0.18%, suggesting that short positions are still more prevalent than long ones.

SOL Leverage Data

This indicates that despite increasing market activity, overall sentiment remains cautious, with many traders betting on potential further declines. For SOL to gain traction and move upward, a shift in Funding Rates to positive territory, alongside continued demand in Open Interest, would be critical indicators of renewed bullish confidence.