Explosion in the Value of Grayscale Solana Trust (GSOL)

In a move that has the cryptocurrency market on alert, shares of Grayscale Solana Trust (GSOL) have seen an impressive rise, reaching a 780% premium compared to the value of the Solana token (SOL). This surprising growth occurred in a remarkable week, where the value of GSOL shares reached an all-time high of US$202, jumping from the US$87 recorded at the beginning of the month.

At the time of publication, the price of Solana was quoted at US$59.00, down 3.5% in the last 24 hours. Considering that each GSOL share represents 0.38 SOL, the premium achieved is indeed impressive. This situation is particularly notable when compared to the 43% maximum premium achieved by Grayscale’s Bitcoin Trust (GBTC) in July 2019.

The GSOL phenomenon signals growing interest from institutional investors in Solana, a cryptocurrency that recently witnessed a 40% increase in value, close to the $63 mark – a level not seen since May 2022.

Grayscale’s cryptocurrency funds have been a gateway for financial institutions in the US seeking exposure to digital assets through traditional financial channels. Unlike exchange-traded funds (ETFs), holdings in Grayscale trusts do not directly reflect the market value of the underlying tokens. This factor contributes to significant fluctuations in the price of its shares.

It is interesting to note the difference in the magnitude of assets under management between GSOL and GBTC. GSOL manages around US$6.3 million, while GBTC has an impressive US$23 billion under management.

Grayscale has ambitions to convert its trusts into ETFs. After an initial request in 2021 to convert its Bitcoin Trust into an ETF, which was denied by the US SEC, the company received important support in August when the US Court of Appeals for the District of Columbia ruled in favor of its similarity to Futures ETFs already approved. With the SEC not appealing the decision in October, speculation is growing that the conversion of Grayscale’s Bitcoin Trust ETF and the restructuring of the company’s other trusts could move forward.

Furthermore, the recent request by BlackRock, the world’s largest asset manager, for a spot Bitcoin ETF in July reinforces the optimistic expectation that such funds may soon receive regulatory approval.

Meanwhile, GBTC shares have also demonstrated remarkable performance, with a 200% year-to-date increase, significantly outperforming Bitcoin’s 10% gains over the same period.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.