Solana ETFs were among the highlights of the week, even as the market concluded the last week of October on a bearish note. Two new Solana ETFs made their debut, ushering in a new era of institutional inflows. Grayscale and Bitwise launched their first spot Solana ETFs during the last week of October.
The two ETFs garnered extra excitement because they were the first staking Solana ETFs. Although the new Solana ETFs were less than a week old, they attracted $199 million worth of inflows in their first four days. The inflows revealed healthy institutional interest and were exclusive of the initial investment or seed amount. Bitwise reportedly raised $222.9 million, while Bitwise seeded $102.7 million as its seed investment.
Why The Buzz Around the New Solana ETF
Crypto ETFs have, for the most part, only focused on tracking the underlying assets. However, the market has been evolving gradually, especially fueled by investor demand for yield-generating assets rather than pure speculation. The staking aspect might make cryptocurrencies more attractive to institutional investors aiming to generate passive earnings with their investment.
The underlying mechanism is as simple as the name suggests. The Solana ETF issuer acquires SOL using investor funds and then stakes the coins to earn yield. This also means yield is generated whether the price is up or down, thus eliminating volatility concerns. The yield aspect has the potential to make SOL more appealing to institutional investors. This could potentially set the pace for robust demand ahead.
Although the Solana ETFs pulled in a substantial amount in the first 4 days, it was not enough to influence market direction. SOL price maintained a bearish disposition in the last week of October.
SOL Price Retests Key Ascending Support Level But Can It Bounce Back?
The cryptocurrency cooled down by 13% from its $205 weekly top to its $178 bottom range for the week. It exchanged hands at $185 at the time of observation.
The SOL price weekly retreat led to another retest of the cryptocurrency’s ascending support structure that has been active since April. The big question now is whether SOL crypto will bounce back or break below the support. The cryptocurrency managed to subdue its bearish momentum after interacting with the aforementioned support on Thursday. However, the subsequent demand remained relatively low, hence the weak recovery.
SOL price managed to stay above its 200-day Moving Average indicator despite the pullback since mid-September. Analysts have been keeping a close eye on the indicator. Sizeable bearish extension accompanied past breakdowns below the 200-day MA. An extended downside was probable, considering that demand, especially from whales, remained weaker.
Moreover, network activity demonstrated some weakness. For example, active addresses dropped to 13.5 million in the last 7 days. This was the lowest weekly activity in the last 12 months.
On the other hand, Solana net inflows remained elevated on account of the expected recovery in November. The network received $237 million worth of net inflows since 27 October. DEX volume also improved slightly compared to the previous week. Nevertheless, SOL crypto experienced a surge in open interest from as low as $8.5 billion to more than $10 billion. This recovery may underscore a potential liquidation event if the cryptocurrency breaks below the current support.