Will We See A Solana ETF In 2025? Insights from Matthew Sigel

In a riveting episode of Lightspeed, recorded live at DAS NY 2025, host Jack sits down with Matthew Sigel to dissect the current state and future prospects of the cryptocurrency market, with a particular focus on Solana. This in-depth discussion covers a wide range of topics, from the potential launch of a Solana ETF to the shifting dynamics in institutional crypto adoption and the broader macroeconomic factors influencing the market.

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The Institutional Crypto Landscape

The conversation kicks off with Matthew Sigel sharing his observations on the institutional sentiment towards cryptocurrencies, particularly Solana, at the DAS NY 2025 conference. Sigel notes a significant discrepancy between the attitudes prevalent on crypto Twitter and those of institutional investors. He reveals a surge in inquiries from allocators and advisors who have previously maintained zero exposure to Bitcoin but are now considering small positions.

This shift in institutional interest is primarily focused on Bitcoin, with Sigel reporting that inbound calls have increased by several hundred percent since the recent election. However, he also points out that interactions regarding proof-of-stake coins, including Solana, have been relatively low. This disparity highlights a cautious approach from institutions, who seem to prefer starting with more established cryptocurrencies before venturing into more complex products.

Stablecoins: The Common Ground

One of the most intriguing insights from the conference is the widespread focus on stablecoins. Sigel describes stablecoins as the "lowest, least common denominator" that garners agreement from all parties involved. This universal interest in stablecoins underscores their potential as a bridge between traditional finance and the cryptocurrency world.

However, Sigel raises an important question regarding stablecoins: their ability to accrue value back to underlying tokens like SOL or ETH. He notes that this value accrual hasn't materialized significantly yet, presenting both a challenge and an opportunity for networks like Solana.

Market Sentiment: Fear vs. Opportunity

Addressing the current market sentiment, Sigel provides a nuanced perspective on the apparent disconnect between the bearish outlook on crypto Twitter and the more bullish stance of institutional investors. He emphasizes the importance of time horizon in investment decisions, stating, "I think it comes down to time horizon for investors who are going to take a multi-year view."

Sigel points out that fear levels in the market are exceptionally high, reaching levels not seen since the COVID-19 pandemic and the Great Financial Crisis. He interprets this elevated fear as a potential buying opportunity for long-term investors. However, he also acknowledges the luxury of patience for those who have maintained cash positions and can now carefully evaluate opportunities.

Solana Futures and ETF Prospects

The discussion then shifts to the recent launch of Solana futures on the CME and its implications for a potential Solana ETF. Despite initial low trading volumes, Sigel remains optimistic about the prospects of a Solana ETF. He dismisses concerns about the necessity of a significant regulated futures market for spot ETF approval, calling it a "Gary Gensler scyop that had no historical basis."

Sigel expresses confidence in the likelihood of Solana ETF approval, stating, "I think the proper odds are 75% to 80% that the Solana ETF will be trading by the deadline in October or shortly thereafter." This optimistic outlook is tempered by acknowledgment of the regulatory hurdles that still need to be addressed, particularly questions raised by SEC Commissioner Hester Peirce.

Macro Factors Influencing Crypto Markets

The conversation delves into the macroeconomic factors currently impacting cryptocurrency markets. Sigel highlights recent changes in market structure, including the end of mega-cap tech outperformance and falling GDP estimates due to tariff-related issues. These factors have contributed to a significant underperformance in the tech sector, which has had a spillover effect on altcoins.

Despite these challenges, Sigel sees potential for a market rebound, particularly in Q4. He points to the decreasing correlation between Bitcoin and the NASDAQ as a positive sign, noting that this reduced correlation has sparked increased interest from institutional allocators seeking diversification benefits.

Regulatory Landscape and Its Impact on Altcoins

Regulation remains a critical factor in the adoption and performance of altcoins like Solana. Sigel discusses the ongoing efforts to address regulatory questions surrounding custody, staking, and the definition of a broker-dealer in the crypto space. He emphasizes the importance of clear regulatory guidance in paving the way for ETF approvals and broader institutional adoption.

Solana's Issuance and Institutional Adoption

The podcast concludes with a discussion on Solana's token issuance and its potential impact on institutional adoption. Sigel draws parallels between Solana's programmatic inflation reduction and the capital formation strategies of early-stage companies. He expresses a balanced view on the recent governance vote regarding inflation rates, appreciating the high participation rate and the community's decision-making process.

The Path Forward for Solana

Looking ahead, Sigel identifies stablecoins as a crucial factor for Solana's institutional adoption. He emphasizes the need to demonstrate how stablecoin transactions can drive fee growth for token holders, potentially changing market sentiment. Regulatory clarity and the relaxation of barriers to stablecoin transactions are highlighted as key elements in this process.

In conclusion, Matthew Sigel's insights paint a picture of cautious optimism for Solana and the broader cryptocurrency market. While challenges remain, particularly in terms of regulation and market dynamics, the potential for institutional adoption and the launch of a Solana ETF present significant opportunities for growth and maturation in the ecosystem.

As the cryptocurrency landscape continues to evolve, Solana's focus on innovation, community engagement, and strategic positioning in areas like stablecoins could play a crucial role in its journey towards greater institutional acceptance and mainstream adoption. The coming months and years will be critical in determining whether Solana can capitalize on these opportunities and solidify its position as a leading player in the digital asset space.

Facts + Figures

• Matthew Sigel reports a several hundred percent increase in inbound calls from allocators and advisors interested in Bitcoin since the recent election.
• Institutional interest is primarily focused on Bitcoin, with less attention on proof-of-stake coins like Solana.
• Economic uncertainty has spiked to levels not seen since COVID-19 and the Great Financial Crisis.
• The correlation between Bitcoin and the NASDAQ peaked at 0.8 in 2022 but has since decreased to around 0.3.
• Solana futures started trading on the CME, but volumes have been lower than Bitcoin and Ethereum futures in the first two days.
• Matthew Sigel estimates a 75-80% chance of a Solana ETF trading by the October deadline or shortly after.
• The combined market cap of expected IPOs in the equity market is about $20 billion, versus a listed universe of roughly $200 billion.
• Solana's programmatic inflation rate was previously set to decline by 15% annually.
• The recent governance vote on Solana's inflation rate (SIMD 228) failed, with high participation from validators.
• Stablecoins are identified as a key focus for institutional interest in the cryptocurrency space.

Questions Answered

What are the current prospects for a Solana ETF?

According to Matthew Sigel, the prospects for a Solana ETF are quite promising. He estimates a 75-80% chance of a Solana ETF trading by the October deadline or shortly thereafter. This optimism is based on ongoing regulatory discussions and the increasing institutional interest in cryptocurrencies. However, there are still regulatory hurdles to overcome, particularly in addressing questions raised by SEC Commissioner Hester Peirce regarding custody, staking, and broker-dealer definitions in the crypto space.

How has institutional interest in cryptocurrencies changed recently?

Institutional interest in cryptocurrencies has seen a significant uptick, particularly since the recent election. Matthew Sigel reports a several hundred percent increase in inbound calls from allocators and advisors who previously had zero exposure to Bitcoin. However, this interest is primarily focused on Bitcoin, with less attention given to proof-of-stake coins like Solana. The shift indicates a growing willingness among institutions to consider small cryptocurrency positions, marking a change from previous hesitancy to engage with the asset class.

What role do stablecoins play in institutional crypto adoption?

Stablecoins are emerging as a crucial factor in institutional crypto adoption. They are seen as a common ground that garners agreement from all parties in the cryptocurrency and traditional finance sectors. Matthew Sigel emphasizes that demonstrating how stablecoin transactions can drive fee growth for token holders could be a game-changer for market sentiment. However, he also notes that the ability of stablecoins to accrue value back to underlying tokens like SOL or ETH hasn't been significantly proven yet, presenting both a challenge and an opportunity for networks like Solana.

How has the correlation between Bitcoin and traditional markets changed?

The correlation between Bitcoin and traditional markets, particularly the NASDAQ, has decreased significantly. In 2022, the correlation peaked at around 0.8 (with 1.0 being perfect correlation). However, Matthew Sigel reports that this correlation has now fallen to about 0.3. This decrease in correlation is attracting more interest from institutional allocators who are seeking the diversification benefits that Bitcoin promises. The reduced correlation is seen as a positive factor that could drive increased institutional adoption of cryptocurrencies.

What macroeconomic factors are currently influencing crypto markets?

Several macroeconomic factors are influencing crypto markets. These include the end of mega-cap tech outperformance, falling GDP estimates due to tariff-related issues, and a general resetting of earnings expectations in the tech sector. These factors have contributed to underperformance in both the tech sector and altcoins. Additionally, high levels of economic uncertainty, comparable to those seen during the COVID-19 pandemic and the Great Financial Crisis, are affecting market sentiment. Despite these challenges, Matthew Sigel sees potential for a market rebound, particularly in Q4, driven by regulatory clarity and increased institutional interest.

How does Solana's token issuance impact institutional adoption?

Solana's token issuance and inflation rate are important considerations for institutional adoption. Matthew Sigel draws parallels between Solana's programmatic inflation reduction and the capital formation strategies of early-stage companies. While high inflation rates can create tax burdens for large holders, they can also support ecosystem growth. The recent governance vote on Solana's inflation rate (SIMD 228) demonstrated high community engagement, with the failure of the proposal indicating a preference for maintaining current issuance levels. Sigel suggests that the community's ability to course-correct if needed is a positive aspect of Solana's governance structure.

What regulatory challenges need to be addressed for broader crypto adoption?

Regulatory clarity remains a significant challenge for broader crypto adoption, especially for altcoins like Solana. Key areas requiring regulatory guidance include custody solutions, staking mechanisms, and the definition of broker-dealers in the crypto space. SEC Commissioner Hester Peirce has raised numerous questions that the crypto community needs to address. Resolving these regulatory uncertainties is crucial for the approval of crypto ETFs and for increasing institutional comfort with digital assets. Matthew Sigel anticipates that as these regulatory issues are clarified, it could lead to a significant rally in the crypto market, particularly in Q4.

How do the trading volumes of Solana futures compare to Bitcoin and Ethereum?

The recent launch of Solana futures on the CME has seen lower trading volumes compared to Bitcoin and Ethereum futures in its first two days. Matthew Sigel attributes this to the current bear market for altcoins and a general lack of interest in altcoins at the moment. However, he doesn't view this as a significant concern for the prospects of a Solana ETF, noting that the relationship between futures volume and ETF approval is not as direct as previously thought. The launch of Solana futures is seen as a positive step towards greater institutional involvement, even if initial volumes are low.