Solana (SOL +1.78%) and Hyperliquid (HYPE +2.19%) exchange-traded funds (ETFs) are seeing capital inflows right as spot Bitcoin ETFs shed roughly $8.2 billion across an eight-week outflow streak culminating on July 6, and Ethereum funds joined them in the red. Solana ETFs now hold about $904 million in assets, and Hyperliquid ETFs have pulled in $350 million since May.
So does that mean investors should be bullish on the coins seeing the inflows?
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Solana's inflows are a sign of renewed confidence
Solana is down by about 60% over the past year. Fresh capital entering into spot Solana ETFs looks a lot like investors and financial institutions buying the dip in anticipation of the chain's upcoming catalysts.
Specifically, Alpenglow, the overhaul that is set to cut transaction finality times from 12.8 seconds to 150 milliseconds, activates on the mainnet sometime between August and October. Faster settlement is what Solana's institutional customers want and need, so it's likely going to be a significant unlock for even more capital onboarding in the future.
CRYPTO: SOL
Key Data Points
If that capital arrives, it'll likely be held in the form of tokenized stocks. The chain currently handles the majority of tokenized stock trading volume, with $5.7 billion in the second quarter alone, and its fast (and soon-to-be-even-faster) speed and low transaction costs, not to mention its massive and improving throughput capacity, are the main draws on that front.
One caveat to know here is that Solana's value accrual mechanism is not as direct as what many investors might hope for. Its on-chain activity doesn't lead to much in the way of pulling supply off the market to boost the coin's price.
Inflows suggest the success of Hyperliquid's flywheel
Hyperliquid ETFs are brand new, having launched in May, so some of the $350 million in value simply reflects capital that's onboarding to a young category for the first time.
As for why investors might want exposure to the coin via the ETFs, its value-accrual mechanism is what separates it from the pack. Hyperliquid routes nearly all of its protocol network fees into a fund that continuously and mechanically buys its token, HYPE, off the open market. That fund has already spent well over $1.3 billion on buybacks that have burned 4.7% of the maximum supply. ETF shareholders benefit from that constraint as directly as token holders do.
Where Solana is working to own the market for spot tokenization of stocks, Hyperliquid is working to own the derivatives layer, specifically perpetual futures contracts. Those futures can be used to speculate on everything from tokenized stocks to cryptocurrencies and more, and they're the main draw to the network, not to mention the main driver of activity that causes token burns to occur.
One challenge with Hyperliquid right now is regulatory. Spot tokenized shares are further along the path to unambiguous and easy regulatory compliance than perpetual futures. That's part of the reason Hyperliquid declines to allow U.S. users to trade on its platform, as it's unclear whether it's legal for it to offer that service.
The verdict
Both of these coins are worth buying, provided that you treat the ongoing ETF flows as a signal which can change rather than something on the same level as the fundamentals.
Solana, while still risky, is the more conservative option of the pair. Alpenglow, when it launches, could be the start of the chain's second renaissance if it succeeds in tokenized stocks.
Hyperliquid is an even riskier play. It's hard to reject a coin with a built-in mechanism turning every shred of activity into buyback pressure.
