Grayscale Investments is one of the companies making cryptocurrency investing more accessible. It has various Trusts providing exposure to different crypto assets. The latest product to launch supports the Solana ecosystem, which is a direct competitor to Ethereum.
A New Grayscale Investments Trust
The primary objective of Grayscale Investments is to provide exposure to appealing cryptocurrencies. Any investor, individual or institutional, can gain access to these products and diversify their portfolio. The choice for Solana is remarkable, although not entirely surprising. Similar to several other currencies, the SOL price has gone up astronomically throughout 2021. As investors want exposure without buying crypto assets directly, a Trust by Grayscale is a viable alternative.
It is the 16th Trust provided by Grayscale Investments to date. The company initially began with a Bitcoin Trust but has since expanded into various alternative currencies. Supported assets include Ethereum, Litecoin, Chainlink, and now Solana, among others. These products cater primarily to high-net-worth investors but can still prove helpful to smaller speculators and traders.
Exposure to Solana comes at a crucial time for the ecosystem. Even though it is a direct competitor to Ethereum, it remains one of the best-performing crypto assets of 2021. A net 650% price increase for the year is impressive, pushing its value to above $200 on multiple occasions. More importantly, the percentual gain is far higher than Ethereum, Algorand, Cardano, or Polkadot.
Competition continues to heat up in the blockchain world. Various ecosystems hope to capture an audience interested in NFTs, decentralized finance, blockchain gaming, or other concepts. That is one reason why Ethereum competitors note explosive growth this year. Of course, Ethereum’s technical constraints are well-documented and will take time to resolve. However, competitors know now is the time to make their bid.
Institutional Money x Solana
There are other reasons why Grayscale Investments opts for a Solana Trust. Institutional money has found its way to that ecosystem, primarily through exchange-traded products tied to SOL. Although the amounts may seem low, a $250 million injection is prominent for a currency that isn’t Bitcoin or Ethereum. Moreover, the inflow of institutional funds appears to accelerate in recent months.
Grayscale CEO Michael Sonnenshein adds:
“In many investors’ minds, there’s a continued appetite to invest in Solana. In some sense, it is a more cost-effective blockchain [than Ethereum], and today we are seeing over 500 decentralized apps and about 1.2 million monthly active users on the network. When you kind of take a step back, and you see how quickly it has been able to ramp up, it’s certainly pretty impressive.”
Ultimately, it remains crucial to gauge the short-term and long-term potential of Solana. The ecosystem checks many right boxes on both fronts. Unlike other blockchains, Solana fosters education, experimentation, and building. Moreover, users often have a higher budget to experiment on Solana as it is more cost-efficient than Etehreum or other solutions. Decentralized applications built on this blockchain continue to attract value locked and more developers.