Solana (SOL) saw its price rise recently after the arrival of the first U.S. staking-related exchange-traded fund (ETF), the REX-Osprey SOL ETF, which is set to begin trading on July 2. The new fund, combining traditional investment structures with staking rewards, represents a unique product in the crypto space. Initially, SOL’s price climbed from $149 to $160 but later pulled back slightly. While the ETF has attracted attention, analysts urge caution, noting the fund’s structure and associated fees could limit its overall impact on the cryptocurrency’s price in the short term.

This ETF differs from typical spot-based crypto funds because it plans to stake at least 40% of its SOL holdings to generate rewards for investors. Direct staking of Solana usually offers annual returns in the 6% to 8% range. However, within this fund, staking rewards will not be paid out directly in SOL tokens. Instead, the rewards will be reinvested into the ETF’s net asset value (NAV), meaning investors will see value growth rather than regular yield distributions. This approach could make the product less attractive to some yield-focused investors.

Regulatory factors also shape the fund’s structure. To comply with U.S. securities regulations, the REX-Osprey SOL ETF is registered under the Investment Company Act of 1940, commonly called the ‘40 Act.’ This means the fund is required to hold approximately 40% of its assets through other funds, known as exchange-traded notes (ETNs), rather than owning SOL directly. This indirect exposure introduces additional management layers and fees, pushing total costs up to around 1.23% annually after accounting for taxes. This is significantly higher than fees for many other ETFs and may reduce net returns for investors.

Bloomberg analyst Eric Balchunas has provided insights into the ETF’s structure and potential investor reception. He explained that most investors prefer ‘33 Act’ ETFs that hold 100% spot assets, offering purer exposure and lower fees. Given the current regulations, such a pure spot SOL ETF is not yet available in the U.S. Balchunas also referenced the recent performance of the Volatility Shares SOL Futures ETF, which underperformed expectations. This example raises concerns that the staking ETF might face similar challenges in attracting sustained investor interest.

Some members of the crypto community have expressed skepticism over the fund’s staking yield. One user estimated that after fees, the effective yield could fall to as low as 1.12%, much lower than the roughly 7% available from staking SOL directly. This difference could discourage investors who want regular income from staking, potentially making the ETF less popular for those seeking yield.

Following the ETF’s debut, market sentiment around Solana remains neutral. According to data from Santiment, the Weighted Sentiment index for SOL showed a slight increase but stayed close to neutral levels, indicating neither strong bullish nor bearish conviction among investors. The options market also reflects this balanced outlook. Traders have set their sights on the $160 and $190 price points as potential short-term upside targets, but there is limited expectation for SOL to surpass the $200 level in the near future. Conversely, downside support appears near $140 and $120, which could act as price floors if selling pressure increases.

The ETF introduces a new way for institutional and retail investors to gain exposure to Solana combined with staking rewards, but its impact on SOL’s price might be modest in the absence of broader market catalysts. The fund’s complex structure and higher fees compared to direct staking or spot holdings could limit demand. However, short-term price gains beyond $160 remain possible, supported by speculative interest and ETF-related buying.

Looking ahead, investors should closely monitor several key factors. Price action around important support and resistance levels—$140, $160, and $190—will provide clues about SOL’s near-term trajectory. Tracking the ETF’s inflows and how effectively it generates staking rewards relative to costs will also be critical. Broader crypto market conditions and sentiment shifts may influence SOL’s price movement, as will the emergence of other investment products offering purer or more cost-efficient exposure to Solana.

In conclusion, Solana’s recent price increase reflects interest generated by the Introduce of the first U.S. staking ETF, a notable development in the cryptocurrency market. Nonetheless, experts advise managing expectations, as the fund’s regulatory structure, fees, and reinvested rather than distributed staking rewards could cap its impact on SOL’s price. The $200 price target remains uncertain in the near term. Investors should remain attentive to technical price levels, market sentiment, and the ETF’s performance before anticipating a sustained rally.