Ethereum ETFs progress, but Solana may turn things bearish instead - How?

New data indicated that the likelihood of approval of Ethereum ETFs was relatively high.
Ethereum lost market share to Solana, however, the price of ETH continued to surge.

Ethereum [ETH] has been under a lot of heat due to the rising speculations around the dismissal of the approval of Ethereum ETFs.

Uncertainty around ETFs

While there is uncertainty regarding timely approval due to the SEC’s silence, it’s a matter of when, not if, a U.S. spot ETH ETF will be approved, according to Coinbase’s data.

However, potential justifications for disapproval may stem from differences between Ethereum and Bitcoin [BTC], particularly Ethereum’s proof-of-stake mechanism.

Clear regulatory guidance on asset staking is lacking, making it unlikely that spot ETH ETFs enabling staking will be approved soon. Despite this, it is believed that unstaked ETH should not be impacted.

There is potential for a positive surprise in the approval decision, with odds estimated around 30-40%.

Considering crypto’s emergence as an election issue, the SEC may hesitate to deny approval, and litigation could overturn a rejection.

Additionally, not all spot ETH ETF applications need to be approved simultaneously, as noted by Commissioner Uyeda’s statement regarding spot BTC ETF approval.

Stiff competition

Even though the possibility of approval of Ethereum ETF’s was high, there were some other challenges that the Ethereum network would be facing. Especially, competition from other Layer 1 chains.

In terms of adoption, the emergence of highly scalable integrated chains, especially Solana [SOL], seems to be impacting Ethereum’s dominance.

With its ability to handle a large number of transactions at low fees, Solana has shifted the focus of trading activity away from the Ethereum mainnet.

Over the past year, Solana’s ecosystem has seen remarkable growth, increasing its share of decentralized exchange (DEX) volume from just 2% to 21%.

Source: Coinbase

Moreover, the increasing popularity of memecoins on the Solana network are also driving users away from Ethereum and towards Solana.

Read Ethereum’s [ETH] Price Prediction 2024-25

Despite these factors, the price of ETH has seen some positive movement. At press time, ETH was trading at $3,117.82 which was a result of a 2.11% appreciation in the last 24 hours.

Even though the price of ETH was rising, its Network Growth declined, indicating waning interest from new users.