Solana spot exchange-traded funds (ETFs) have gained significant attention since their launch, attracting a remarkable $884.4 million in cumulative inflows. Despite this success, the price of Solana (SOL) has experienced a notable downturn, currently trading around the $117 mark, down 37.8% since October. This downward trend has surprised many investors, given that the ETFs have not seen any weekly outflows since their introduction.
Analyst Simon Shockey from Delphi Digital noted that while the ETF inflows represent a supportive signal for the token, they do not dictate its market price. He explained, “The ETF wrapper is still small compared to the overall market that determines the clearing price — particularly in perpetual futures trading, where leverage, funding rates, and liquidations can significantly impact price movements.” In the past 24 hours alone, approximately $29.8 million worth of long positions in Solana were liquidated across various centralized and decentralized exchanges, with the largest single liquidation reaching $401,799.
Shockey further emphasized the disparity in flow dynamics, stating that current ETF inflows are only in the low single-digit millions daily, while trading volumes for Solana exceed billions each day. Specifically, the token has recorded a 24-hour trading volume of around $5.3 billion, with $430 million generated on the crypto perpetuals exchange Hyperliquid.
The relationship between ETF inflows and spot buying pressure is complex, according to Shockey. He explained that ETF flows primarily involve the creation of new shares rather than directly translating into immediate purchasing of the underlying asset, SOL. Much trading activity occurs within the ETF shares themselves, and authorized participants have various strategies to source liquidity without immediately impacting the spot market.
Looking ahead, the analyst has expressed caution based on supply-side concerns. He highlighted the forthcoming release of previously locked SOL from the FTX bankruptcy estate auctions as a factor contributing to market apprehension. In 2024, FTX’s bankruptcy administrators sold a substantial portion of a $2.6 billion Solana stash, which had a cost basis of $64, to institutional investors, including Galaxy Trading. These tokens will be released gradually, with 20% set to unlock in March 2025 and the remainder following monthly until 2028.
While unlock events do not necessarily equate to immediate selling pressure, Shockey indicated that they contribute to an ongoing narrative of supply overhang, which may cap potential rallies as traders anticipate regular distributions and hedging activities.
