Solana’s price dropped about 5% shortly after the Bitwise Solana Staking ETF launched on October 2025, despite strong $69 million inflows. Traders engaged in profit-taking following the “buy the rumor, sell the news” pattern, while staking risks could impact liquidity during redemptions.
Strong Launch Inflows: The ETF attracted $69.45 million on day one, signaling robust investor interest in Solana.
Profit-Taking Pressure: Post-launch selling led to a quick price dip, reflecting classic market reactions to anticipated events.
Liquidity Concerns: Full staking of SOL holdings raises potential challenges for handling large investor outflows efficiently.
Discover why Solana’s price dipped after the Bitwise ETF launch despite inflows. Explore risks, market reactions, and future outlook for SOL investors in 2025.
Why Did Solana’s Price Drop After the Bitwise ETF Launch?
Solana’s price drop after the Bitwise ETF launch occurred due to widespread profit-taking by traders immediately following the event’s debut. The Bitwise Solana Staking ETF, or BSOL, went live in October 2025, drawing significant attention but triggering a sell-off as investors cashed in on pre-launch gains. This reaction aligns with the common “buy the rumor, sell the news” strategy observed in cryptocurrency markets, where anticipation builds hype that dissipates post-event.
The ETF’s strong first-day performance, with $69.45 million in inflows, pushed total assets under management to approximately $289 million, representing about 0.27% of Solana’s overall market capitalization. However, despite this positive influx, Solana (SOL) experienced a roughly 5% decline in the hours after the launch. Technical indicators, such as large red candles on one-hour charts and spikes in trading volume, underscored the selling pressure, while the Relative Strength Index (RSI) indicated waning momentum and the On-Balance Volume (OBV) showed diminished buying interest.
Market participants appeared to lock in early profits, contributing to the short-term uncertainty. Solana’s open interest climbed to $4.36 billion as leveraged positions reopened, yet the average funding rate stayed negative at -0.18%, suggesting that short positions outnumbered longs and reflecting cautious sentiment overall.
What Are the Key Risks Associated with the Bitwise Solana Staking ETF?
The Bitwise Solana Staking ETF introduces unique risks primarily tied to its full staking mechanism for all held SOL tokens, which could strain liquidity during periods of high redemptions. According to ETF expert Nate Geraci, this structure—where 100% of the fund’s SOL is staked—might lead to challenges if investors seek to exit en masse, as unstaking processes involve cooldown periods that delay access to funds. Bitwise’s filing outlines that in such scenarios, the trust may need to swap “Moderately Liquid Solana” (tokens pending unstaking) for “Highly Liquid Solana” through third-party trades, potentially causing a slight reduction in the fund’s net asset value (NAV).
This liquidity risk is particularly relevant in volatile crypto markets, where rapid shifts in investor confidence can amplify redemption pressures. Historical data from similar staking products shows that unstaking delays, often lasting several days on the Solana network, have previously impacted fund performance during downturns. Geraci emphasized that while the ETF’s staking approach aims to generate yields for investors—potentially up to 5-7% annually based on Solana’s network rewards—it heightens exposure to operational frictions not seen in non-staking counterparts like Bitcoin or Ethereum ETFs.
Supporting statistics from Solana’s blockchain analytics reveal that average unstaking times can extend to 2-4 days under normal conditions, but network congestion could prolong this further. Experts from firms like The Block have noted that such mechanisms, while innovative, require robust risk management to maintain investor trust. Overall, the ETF’s design balances yield potential against these liquidity hurdles, making it essential for investors to assess their tolerance for such dynamics.
Inflows Strong, but Redemption Risks Emerge
BSOL made a solid entrance yesterday, attracting $69.45 million in first-day inflows and bringing total assets to $289 million; roughly 0.27% of Solana’s market cap.
Source: X
While the launch shows Solana’s strong investor appeal, ETF expert Nate Geraci flagged a structural risk. Bitwise plans to stake 100% of the SOL held in the fund, so liquidity could tighten during large redemptions.
Source: X
According to Bitwise’s filing, if unstaking delays occur, the trust may exchange “Moderately Liquid Solana” (pending cooldown) for “Highly Liquid Solana” via third-party trades. This is a process that could slightly reduce the fund’s NAV during high-redemption periods.
Beyond immediate liquidity issues, broader market factors play a role. Solana’s network has demonstrated resilience with high transaction throughput, processing over 2,000 transactions per second on average in 2025, according to on-chain data from Solana Beach. However, the ETF’s reliance on staking introduces counterparty risks from validators, as poor performance or slashing events—though rare—could affect yields. Bitwise mitigates this by selecting top-tier validators, but investors should monitor network health metrics closely.
Comparative analysis with other ETFs shows that staking-enhanced products have historically outperformed non-staking ones during bull markets, delivering compounded returns from both price appreciation and staking rewards. For instance, similar Ethereum staking ETFs have seen yield contributions of 3-5% annually. Yet, in bearish scenarios, the illiquidity premium can exacerbate losses, as evidenced by drawdowns in yield-bearing DeFi protocols during the 2022 crypto winter.
Frequently Asked Questions
How Does the Bitwise Solana Staking ETF Differ from Traditional Crypto ETFs?
The Bitwise Solana Staking ETF stands out by staking all its SOL holdings to earn network rewards, potentially boosting returns by 5-7% annually, unlike spot ETFs that simply hold assets without yield generation. This approach, detailed in Bitwise’s prospectus, involves partnering with trusted validators on the Solana blockchain. However, it adds complexity with unstaking delays, making it suitable for long-term holders rather than those needing quick liquidity, based on regulatory filings from the SEC.
What Should Investors Watch for in Solana’s Market After the ETF Launch?
Investors should monitor funding rates shifting positive, rising open interest above $4.5 billion, and sustained ETF inflows exceeding $100 million weekly to gauge bullish momentum for Solana. Negative funding rates like the current -0.18% signal caution, but a reversal could indicate growing long positions. On-chain metrics, such as active addresses and transaction volumes from Dune Analytics, will provide real-time insights into network adoption driving SOL’s value.
Key Takeaways
- Profit-Taking Drove the Dip: Despite $69 million inflows, Solana’s 5% price drop stemmed from traders selling post-launch, a typical reaction to hyped events.
- Staking Enhances Yields but Risks Liquidity: Bitwise’s 100% staking strategy offers attractive rewards, yet unstaking delays could challenge redemptions, as noted by expert Nate Geraci.
- Cautious Sentiment Persists: Negative funding rates and mixed technicals suggest monitoring for bullish flips in open interest and RSI to assess recovery potential.
The one-hour chart showed strong selling pressure at press time, with large red candles and trading volume spikes indicating profit-taking. RSI showed weakening momentum, while OBV proved reduced buying activity.
Despite strong ETF inflows, SOL’s short-term outlook remains uncertain as traders appear to be locking in early gains.
Leverage Builds, but Caution Dominates
Solana’s Open Interest rose to $4.36 billion, so traders are reopening leveraged positions after the ETF launch.
However, the average Funding Rate remained negative at -0.18%, meaning short positions still outweigh longs.
Source: Coinalyze
This means that despite growing market activity, sentiment is cautious, with many traders betting on further downside.
For SOL to move higher, a flip in Funding Rates toward positive territory and continued demand in Open Interest would be key signs of bullish confidence.
As the Bitwise Solana Staking ETF settles into the market, its launch impact on Solana’s price highlights the interplay between institutional inflows and trader behavior. While short-term dips from profit-taking are common, the ETF’s staking features could provide long-term yield advantages, provided liquidity risks are managed effectively. Investors eyeing Solana in 2025 should track ongoing inflows and network metrics for signs of sustained growth, positioning themselves for potential recoveries amid evolving crypto regulations.
Conclusion
In summary, the Bitwise Solana Staking ETF’s debut brought substantial inflows but triggered a Solana price drop through profit-taking, underscoring redemption risks in Solana ETFs like liquidity constraints from full staking. With open interest rising and cautious funding rates, the path forward depends on bullish reversals and robust network performance. As Solana continues to innovate, this ETF could solidify its role in mainstream finance—stay informed and consider diversified strategies for navigating volatility ahead.