Solana funds experienced a significant outflow of $39 million last week, marking the largest weekly withdrawal on record for the cryptocurrency. Analysts believe this may be due to investor concerns about Solana’s heavy reliance on memecoins, which has raised concerns about the platform’s stability and long-term prospects.
CoinShares’ report on digital asset fund flows highlighted these significant outflows, with $37 million coming from the 21Shares Solana ETP and another $2 million from the WisdomTree Solana ETP. These products, primarily traded in Europe, saw the majority of selling from their Swiss counterparts.
The involvement of multiple investors is likely due to the anonymous nature of ETP trading. The decline in interest might be linked to concerns over Solana’s dependence on memecoins, as memecoin trading has become a significant part of Solana’s transaction volume, which may be unsettling to more conservative investors.
This shift in sentiment could also affect the future demand for Solana ETFs, particularly in the U.S., where regulatory approval is still uncertain.
Both VanEck and 21Shares have applied for spot Solana ETFs in the U.S., but the recent outflows from European Solana funds could raise doubts about the potential demand if these ETFs are approved. Additionally, the SEC’s ongoing concerns about whether Solana is a security add further complications.
Despite these outflows, institutional investors are not necessarily abandoning Solana. CypherPunk Holdings in Toronto recently acquired about 86,300 SOL, and GSR, a crypto trading firm, remains long on SOL, indicating that there is still interest in the asset despite recent sell-offs.
Recently, the US SEC has classified Solana (SOL) as a possible securities, affecting the launch of SOL ETFs. This has led to the Chicago Board Options Exchange (Cboe) withdrawing the 19b-4 forms from its website, causing a delay in the certification process. The SEC concerns have also led to the withdrawal of VanEck and 21Shares’ 19b-4 forms from Cboe Global Markets’ website.
