While the precious metals market has been one of the natural beneficiaries of the Federal Reserve's interest rate cut and dovish monetary policy pivot, it's the cryptocurrency sector that arguably deserves the most attention. Shortly after the Fed's rate cut announcement, the total market capitalization of all decentralized digital assets popped higher, reaching a record height of $4.12 trillion. Among the top performers was Solana (CCC: SOL-USD), which currently stands as the sixth-most valuable cryptocurrency.
Since the beginning of the year, SOL gained nearly 13%, which admittedly isn't the most impressive print. However, in the trailing six months, the digital asset gained 61%. During the same period, Bitcoin (CCC: BTC-USD) has moved up only 30%. Presently, SOL trades on firm ground, with its price action above both the 50-day and 200-day moving averages. Furthermore, volume has picked up relative to prior months, implying a confirmation of the bullishness.
On the fundamental side, a key selling point for Solana is its underlying blockchain ecosystem. Unlike Proof-of-Work (PoW) architectures, Solana runs on Proof of Stake (PoS). In simple terms, this means that the network relies on validators who confirm transactions. To be a validator or to support the process, users can elect to "stake" (or lock up) their tokens. For their troubles, validators earn rewards, which can function somewhat like dividend payments.
Moreover, this economic incentivization promotes wide-scale utility for blockchain developers. By deploying a smart contract or program within the Solana ecosystem, it becomes instantly integrated into a global, public permissionless system. Even better, because Solana runs on a decentralized validation protocol, no single entity controls apps deployed on the blockchain.
Still, there are many risks and inconveniences associated with cryptocurrency ownership, with security being the core concern. Stolen (or even forgotten) passwords, along with phishing attacks and cyber breaches can wreak havoc on investor portfolios — and individual sanity. As such, the public has sought viable alternatives to direct ownership of digital assets.
The REX Shares ETF: To meet the growing and diverse needs of cryptocurrency investors, financial services provider REX Shares — a specialist in innovative exchange-traded funds — has recently launched a Solana-centric product. Known as the REX Osprey SOL Staking ETF (BATS:SSK), the fund aims to deliver multiple benefits while addressing key concerns of cryptocurrency ownership.
Essentially, the SSK ETF offers a packaged mechanism for U.S. investors to gain exposure to the SOL token, in addition to the staking rewards — all without having to directly hold or manage crypto assets.
Structurally, SSK is designed to track the performance of SOL, which may appeal to investors seeking capital gains potential. But what distinguishes the ETF from similar products is that the majority of the fund's SOL is staked. Later, the staking rewards are passed on to shareholders through monthly distributions.
In many ways, the SSK ETF can be thought of as the best of both worlds. Investors participate in both the potential capital growth and passive income narratives. On the other end of the scale, they don't have to worry about the custodial risks of direct cryptocurrency ownership, such as private key management and exchange security.
Still, prospective participants must familiarize themselves with the unique risk profile of crypto-related investments. While the sector is one of the most exciting, it also elevates the senses due to its history of volatility. Significant fluctuations can occur in a blink of an eye. Plus, one must be acutely aware that cryptocurrencies trade 24/7.
It's not unusual for digital assets to respond to dramatic news overseas — all occurring while U.S. investors sleep.
The SSK ETF: While the REX Osprey SOL Staking ETF has only made its debut this past July, the fund is off to a strong start, gaining about 28%.
- As with the SOL token, the SSK ETF appears to be on solid technical ground, trading above the 50 DMA while benefiting from increased acquisition volume since early August.
- What is worth observing closely is that recent sessions have suddenly dropped SSK below its 20-day exponential moving average. It's not panic-worthy but caution needs to be applied.
