A significant shift is underway in the cryptocurrency exchange-traded product (ETP) landscape, with Solana ETFs remarkably outperforming their Bitcoin and Ethereum counterparts. Since October 28th, when Bitwise launched its BSOL US Solana ETF, these new funds have attracted a notable $284 million over six consecutive trading days. This inflow stands in stark contrast to the substantial outflows from Bitcoin and Ethereum funds during the same period.
According to Farside Investors, Bitcoin ETFs lost a considerable $1.7 billion, while Ethereum products shed $473 million. This divergence is particularly striking as it unfolded amidst challenging macroeconomic conditions, including a hawkish Federal Reserve and a strengthening dollar – factors that typically reduce appetite for risk assets. Despite this, Solana’s new offerings consistently absorbed capital while established funds faced redemptions.
Understanding the Market Dislocation
Leading up to November 4th, Bitcoin and Ethereum spot ETFs collectively saw approximately $797 million in single-day outflows, reflecting souring sentiment. Conversely, Solana funds registered consistent net creations. Global ETP data from CoinShares for the week ending October 31st mirrored this trend, with Bitcoin products leading outflows while Solana drew in about $421 million—its second-largest week on record, driven entirely by US launches. Farside’s issuer-level data confirms multi-day bleeding for Bitcoin and negative shifts for Ethereum, while both US Solana ETFs maintained positive flows since their debut.
These sustained flows suggest Solana's capital attraction is more than transient noise. Persistent redemptions in Bitcoin and Ethereum ETFs mechanically shrink their total crypto ETF assets under management (AUM) and reduce demand for underlying tokens. In contrast, consistent creations in Solana ETFs tighten available float and deepen secondary liquidity for SOL. If this trend persists for weeks, index constructors, allocators, and market makers will likely recalibrate exposures towards Solana, potentially amplifying its relative performance.
New Launch Momentum vs. Genuine Demand
The strong performance of Solana funds largely aligns with the typical "new-product launch window," often characterized by front-loaded creations from seed and conversion capital. Grayscale’s GSOL, for example, showed unusually strong initial results before its pace decelerated. The crucial question is whether this initial surge is mere launch enthusiasm, amplified by a temporary risk-off swing affecting Bitcoin and Ethereum, or indicative of genuine allocator rotation.
The distinction hinges on sustainability. If Solana ETF creations settle to low-single-digit millions daily, and Bitcoin and Ethereum outflows slow as macro conditions stabilize, the rotation narrative would likely fade. However, if US-traded Solana funds continue to absorb net creations beyond the exhaustion of seed capital—potentially for four to six consecutive weeks—even as Bitcoin and Ethereum funds continue to leak due to macro jitters, then the reweighting towards Solana could become durable. CoinShares attributes Solana's recent strength primarily to US ETF demand, not a single issuer's anomaly, suggesting broader market interest.
Eric Balchunas observed on November 1st that Bitwise's BSOL led all crypto ETPs “by a country mile” in weekly flows with $417 million, ranking 16th overall among all ETFs for the week. This remarkable outperformance, even against BlackRock’s IBIT during a rare off-week, signals active distribution and that allocators are confidently adding Solana exposure without waiting for Bitcoin or Ethereum to stabilize.
The Long-Term Outlook
The key metric to monitor is the "post-launch steady state" of Solana creations versus Bitcoin and Ethereum redemptions. Should Solana maintain positive net creations after seed flows diminish, and Bitcoin and Ethereum remain net negative on a rolling weekly basis, this shift can be considered structural. Conversely, if Solana creations taper off and incumbent funds stabilize, the event will likely be viewed as a launch-window anomaly, exaggerated by a temporary risk-off period.
Solana doesn't need to overtake Bitcoin or Ethereum in total assets to win this round. Its performance demonstrates that a well-timed ETF launch can attract significant capital even when broader macroeconomic conditions are unfavorable. The lesson for future altcoin ETFs is clear: effective distribution can generate its own demand, and strategic timing—coinciding with dips in incumbent flows—can accelerate market shifts. The decisions of allocators over the next month will reveal if Solana’s ETF debut marks a new opening or merely an interesting blip.
Source: CryptoSlate
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