Bitwise Solana ETF gains first-mover advantage, while competitors urgently adjust strategic plans

On October 28, Bitwise Asset Management took the lead in launching the United States’ first spot Solana ETF (ticker: BSOL). The product raised $420 million in its first week, prompting competitors to urgently adjust their strategies. Grayscale Investments quickly converted its private funds into ETFs, while VanEck, Fidelity, and Invesco immediately amended their filings to follow Bitwise’s lead.

Industry analysts predict that ETF assets for altcoins, including Solana, could reach $14 billion within six months. The launch coincided with a partial paralysis of the U.S. Securities and Exchange Commission (SEC) due to a government shutdown. Bitwise’s first-mover advantage during this regulatory window could reshape the crypto ETF market landscape.

Market Performance of Bitwise’s Solana ETF

Bitwise’s Solana Staking ETF is listed on the New York Stock Exchange (NYSE), rather than the traditional Cboe platform, reflecting strategic considerations. A Bitwise spokesperson explained, “For such a unique product, it’s crucial to bring it to the largest and most experienced ETP listing platform globally.” The ETF not only tracks Solana’s price but also incorporates staking rewards, allowing investors to benefit from both price appreciation and network staking yields. As the sixth-largest cryptocurrency, Solana’s inclusion marks a shift for crypto ETFs beyond Bitcoin and Ethereum into a broader altcoin space.

The product was launched during the SEC’s government shutdown. Although the SEC permits exchanges to list crypto ETFs using general listing standards, most issuers prefer the security of formal approval. Matt Hougan, Chief Investment Officer at Bitwise, defended the company’s approach: “We are following the rules.” This bold strategy has given the firm a valuable first-mover advantage. Ben Slavin, head of BNY Global ETF, noted, “Even a one-day advantage can determine who captures millions in fees.” In a highly competitive ETF market, such timing differences can lead to permanent market share advantages.

Competitors’ Emergency Responses and Market Reshuffling

Bitwise’s move forced competitors to reassess their cautious strategies. Grayscale immediately began converting its private funds into ETFs using the same regulatory channels. VanEck amended its Solana ETF application to include staking features, maintaining competitiveness. Fidelity and Invesco accelerated preparations for their altcoin ETFs, including products related to Ripple’s XRP. Even Canary Capital launched spot Litecoin and Hedera ETFs on Nasdaq on the same day, creating a collective surge in altcoin ETF launches.

This competitive dynamic stems from a fierce race for market share. Historical data shows that in Bitcoin spot ETF competitions, the first three issuers hold 75% of the market, and later entrants—even with lower management fees—struggle to gain ground. According to LSEG estimates, the management fee for Solana ETFs is expected to be between 0.75% and 1.25%. With an anticipated $14 billion in assets, the first-year management fee revenue could range from $105 million to $175 million. These economic incentives motivate issuers to accept certain regulatory risks, especially amid a generally crypto-friendly environment under the Trump administration.

Key Data on Bitwise Solana ETF

Product Features

• Ticker: BSOL
• Exchange: NYSE
• Special Features: Incorporates staking rewards
• Custody Arrangements: Not publicly disclosed

Market Performance

• First-week fundraising: $420 million
• Management fee: Estimated 0.75%-1.25%
• Competitors’ follow-up: Grayscale, VanEck, Fidelity
• Market forecast: Altcoin ETF total assets could reach $14 billion within 6 months

Regulatory Environment and Future Challenges for Solana ETF

The SEC’s government shutdown created a unique regulatory environment. According to SEC emergency procedures, staff numbers dropped from around 4,500 to approximately 300 “essential personnel,” capable only of handling urgent matters. While the SEC allows exchanges to list new products using pre-approved general standards, issuers are warned that future regulatory intervention is possible. This uncertainty has led many traditional financial institutions to adopt a wait-and-see approach, whereas crypto-native firms like Bitwise see it as a strategic opportunity.

From a legal perspective, the approval of a Solana ETF raises questions. The approval of Bitcoin and Ethereum spot ETFs was based on arguments that “market size and liquidity are sufficient” and that “spot and futures markets are significantly correlated.” Solana differs because it lacks a regulated futures market like CME, making SEC’s previous approval logic harder to apply. Bitwise may rely on a “market surveillance sharing agreement” with exchanges—an arrangement that allows detection of market manipulation—but this approach has not yet been tested in court.

Evolution of the Crypto ETF Market and Investment Opportunities

The crypto ETF market is undergoing a historic shift from single-asset to diversified products. After Bitcoin and Ethereum, Solana becomes the third cryptocurrency to obtain a spot ETF, setting a precedent for other altcoins. Analysts believe that the next assets likely to receive approval include XRP (with multiple applications already submitted), Cardano, and Polygon. This diversification mirrors the early 2000s development of traditional ETFs, which followed the success of S&P 500 ETFs, leading to a proliferation of sector, country, and factor-based ETFs.

For investors, altcoin ETFs offer a more convenient asset allocation tool. Directly holding altcoins involves challenges like private key management, tax reporting, and security risks. ETFs enable exposure similar to trading stocks. A core-satellite investment strategy is recommended: allocate 60% of the portfolio to Bitcoin and Ethereum ETFs as core holdings, 25% to large-cap altcoin ETFs like Solana, and 15% to smaller or actively managed crypto ETFs. Note that altcoin ETFs tend to be more volatile than Bitcoin, so individual product allocations should not exceed 10% of total assets.

Conclusion

The successful debut of Bitwise’s Solana ETF marks a significant milestone in the mainstream adoption of crypto assets. When institutional investors can easily access Solana and other altcoins through traditional brokerage accounts, the integration of crypto markets with traditional finance accelerates. Despite ongoing regulatory uncertainties, market reshaping and product innovation are driving crypto investments from the fringes toward mainstream acceptance, laying the groundwork for the next growth cycle.