BSOL: Solana At The Crossroads

Summary Bitwise Solana Staking ETF (BSOL) offers direct Solana exposure with staking income. Its 0.20% expense ratio and 6.77% staking yield could make it a compelling, tax-advantaged vehicle for a long-term crypto allocation in IRAs. Solana’s high throughput, low fees, and growing institutional adoption (notably Visa) position it as a leading blockchain for tokenization and stablecoins. Despite its extreme volatility, short history, and legal risks, BSOL’s platform and ecosystem warrant close monitoring for potential recovery and long-term value. ETF managers rarely get the timing right. The Bitwise Solana Staking ETF ( BSOL ) debuted last fall and practically rang the bell of its own market top. It launched on October 28 at $25.55. It now trades at $11.33, having lost more than half its value in less than four months. Ouch. . .. At a longer glance, though, the fund has a lot to like. Its .20% expense ratio is quite modest for the innovative way it leans into a genuinely new asset via price appreciation and income. Unlike a standard spot price ETF, BSOL (market cap: $477 million) is unique in that it is a “staking” fund. While offering direct exposure to Solana, it also generates staking income (staking 100% of its assets via its partner Helius) to add to total returns. This allows investors to lean into additional income --re-invested and not distributed, presently 6.77%-- as transaction demand expands. Placed into a Roth or traditional IRA, the staking rewards incur no taxes (and avoids UBIT). Staking Rewards --Feb. 13 (Bitwise Website) The Solana platform has long been known as the proverbial “ strong horse ” of the crypto field. Launched in 2020 by engineers looking for better performance, its raw metrics are impressive. It is known for its low latency—i.e. it can confirm a transaction in a mere 400 milliseconds (compared to, say, 12 seconds for Ethereal ( ETHE ), or a glacial 10 minutes for Bitcoin.) Besides being fast, it also offers a very low transaction cost of .01, again much cheaper and better than its primary competitor ETHE. More impressively, the platform can process 100,000 financial transactions per second , which is more activity than all the stock markets of the world combined. This is clearly the kind of functionality a platform will need if it is going to do the future’s heavy lifting. And indeed, Solana generated over $2.8 billion in network revenue in the past year, more than any other chain. The Down Draft For all the talk of crypto being an alternative asset, it has performed and correlated much more like a market liquidity indicator. The past few months have been tough sledding. Unlike tech, the crypto market never recovered from the October drop, seeing no reprieve in December or January. Of course, the liquidity cycle has always been the Great Humbler, and to fight against it as futile as Cuchulain’s strikes against the waves . A serious drawdown can make a ticker go from a momentum play to a contrarian play in the blink of an eye. Solana-USD has plummeted from $247 in mid-September to $86 this week, with nearly 38% of that screeching slump coming in the past month. That is what market analysts typically call an “extreme fear” condition, when negative sentiment dislocates price with indiscriminate selling. However, this wasn’t all sentiment. In late December, a class action lawsuit against digital casino app Pump.fun (“with a name like that, what could go wrong…”) appeared to expand to the Solana Foundation, a mission-critical institution of the ecosystem. The prosecution alleges RICO-like schemes and the rigging of coin launches, pointing to over 5,000 emails between Foundation and Pump.Fun engineers that supposedly relate to “rug pull” manipulation and first/best price access. Again, it is important to register that class action attorneys typically go for the deepest pockets and the conversations between engineers might not be known or sanctioned by management, but a high-profile lawsuit is never a good look for a platform’s pre-eminent institution. Shoes often keep dropping over the course of a long legal process. The news clearly helped to take the coin down hard in January, leaving it well below its moving averages: Technical chart (Author) The coin saw a very oversold RSI throughout most of February, with the price going as low as $69 but essentially bouncing off its 2022 consolidation support of $78 - $82. Does this qualify as Baron Rothchild's “blood in the streets”? Yup, though there could be some additional arterial bleed-out. Solana fell into the $10 range back in late 2022, during the liquidity collapse of the so-called UK Gilt Crisis: Five Year Chart (Author) It had fallen for 13 months (Nov. 2021 to Dec. 2022). It only stabilized in the low $20s in early ’23. The tale of the tape is not destiny, but it is a record of support, resistance, and the parameters of conviction. In fact, the RSI is now as low as we saw in the depths of ’22 --a very positive indicator. And Solana is seeing an institutional-level embrace (Visa, Treasury) that was simply unthinkable in ‘21 or ’22. However, it does suggest that we need to be sanguine as to the length of these crypto winters. Outlook Solana-USD is clearly at a juncture, but is it at a near-term or a long-term bounce? I ask each you, as individual investors, to scrutinize Solana at this price and to deploy your own due diligence. There are some impressive things to like here. Solana is arguably the one blockchain platform best equipped to handle the future trends in stable coin, tokenization, and AI agency. Solana is a blockchain platform with real “smart contract” functionality, and with developers offering a wide range of DeFi services and “ decentralized apps ” (dApps). As mentioned earlier, it offers exceptional speed, processing power, and distinguishing cost. It feels like an evolutionary rung higher than both Bitcoin and Ethereum and arguably renders both mute as platforms of high performance. Exhibit A of Solana’s relevance: in December Visa ( V ) officially launched a stablecoin settlement for two US banking partners on the Solana blockchain . Two banks –Cross River and Lead—will be the first participants settling with the credit card juggernaut via Circle’s USCD. Nikhil Chandhok, Circle’s Chief Technology Officer called the event “ a milestone for internet native money moving at the speed of software ." Visa said it chose the Solana platform for its high throughput & low fees. It will enable much faster 24/7 treasury operations. This event didn’t get a lot of press when it hit, but it is rather momentous, suggesting which “rails” Visa will be moving on for its hefty transactions in the US. As one Visa head declared: “Financial institutions are looking for faster, programmable settlement options that integrate seamlessly with their existing treasury operations .” Visa already has stable coin settlement “pilot programs” in various countries in the Pacific, Latin America and the Middle East, and its monthly stable coin volume hit a $3.5 billion annualized run rate late last year. (It’s still just pilot programs, but because it's Visa it’s already rounding up to big money. Translation: the future’s so bright, you’ll have to wear shades.) In addition to its in-roads via Visa, Solana could see additional demand from savers worldwide. The US may seek to use stablecoins to bolster the dollar (and treasury demand) in the face of central bank diversification by “going directly” to Developing World savers trapped in weak currencies (i.e. Egypt, Turkey, Nigeria, etc) who would prefer a digital solution to “currency in the mattress.” Because behind every stablecoin is a T-bill, this qualifies as an interesting, forward-looking “new way” to keep treasury demand up. The Genius Act of July 2025 offers a clear regulatory framework for USD-backed stablecoins, providing them with eligible reserves. In turn the coins support the treasury market. This demand increases liquidity for government debt, with coin issuers acting as a growing buyer of short-term T bills and now holding more than $200 billion . Tokenization (RWAs) As a high-performance/low-cost “proof of history,” Solana provides an ideal platform for those companies pioneering the tokenization of real-world assets. It also enables 24/7 trading and fractional ownership for those stocks, bonds, and real estate that are “assigned” digital tokens on the chain. Though I see pushback from exchanges and even governments (and even agree on the merits of “jurisdictional siloing”), there are certain ways in which tokenization could offer enormous efficiencies. I have been to blockchain conferences on the application of blockchain to property titling, something that is of great and lumbering societal expense. Big players in the RWA space like Ondo Global Markets and WisdomTree are using Solana. Ondo has tokenized over 200 stocks and ETFs, $450 million in total value, made available to non-US investors. WisdomTree has also done some innovative things in this sector, allowing institutional clients to manage tokenized assets directly on Solana, apply Solana-native applications, and off-ramp to self-custody wallets. As Solana Foundation’s Nick Ducoff proclaimed : “As real world assets on Solana surpass $1B, WisdomTree’s decision to expand their full suite of tokenized funds to Solana reflects the demand for expanded access to tokenized RWAs and Solana’s ability to support that demand at scale . This launch also highlights the growing role regulated asset managers play in shaping the future of on-chain finance." Risks and Opportunities The risks of Solana should be obvious: it is a novel platform of extreme volatility. Its long-term survival remains unproven. The coin could conceivably drop 75% from here and quite quickly –perhaps this month! However, there has been a clear sea change in assessment at the federal level as to the future of crypto and blockchain. Solana is being institutionalized –not for its antagonism to fiat currency ( a la Bitcoin AKA gold 2.0)—but rather for its prowess as a solution. The context reminds me of the “ Paperwork Crisis of 1967 ” which was caused by the outmoded manual back-office operational processing of stock orders in the face of massive new trading volumes. During the Go-Go Boom, daily NYSE volume went from 5 to 15 million in 4 years (1964 to 1967). Even clerks working in three shifts seven days a week couldn’t keep up. The solution to the crisis: computerization. As a platform, Solana might be our modern equivalent, in which case an early investment in a staking ETF like BSOL could be quite valuable in the coming decades. On Friday, BSOL saw a strong bounce off a possible double bottom (the Feb. 5 and Feb. 12 lows). One day does not a direction make. Being early can also mean being wrong. However, whether you buy now at $11.28 or wait to see if BSOL drops to into the $2 - $3 range, the ticker and its platform are worth keeping an eye on.