- Spot Bitcoin and Ethereum ETFs in the U.S. have achieved high levels of success since their launch last year.
- Asset managers are now seeking approval for ETFs that track smaller cryptocurrencies, such as Solana, Dogecoin, and XRP.
- Bloomberg analysts estimate over a 90% chance that some altcoin ETFs will gain regulatory approval this year.
- Experts are divided on whether altcoin ETFs will attract the same level of interest as Bitcoin and Ethereum products.
- U.S. regulators are currently reviewing more than 30 applications for spot altcoin ETFs.
U.S. asset managers have submitted applications to launch spot exchange-traded funds (ETFs) for several smaller cryptocurrencies, with Bloomberg analysts predicting a high likelihood that products tracking Solana, Dogecoin, and XRP will start trading later this year. This push comes after the strong performance of Bitcoin and Ethereum ETFs in the market.
Spot Bitcoin ETFs, which allow investors to buy and sell shares tied to the price of Bitcoin without holding the digital asset directly, have already accumulated over $130 billion in assets since their debut. Nine Ethereum funds have also drawn in approximately $10 billion, according to the original source.
However, opinions differ on how much demand there will be for ETFs focused on altcoins, or cryptocurrencies beyond Bitcoin and Ethereum. "Everyone knows Bitcoin by now and it’s synonymous with crypto," said Adam McCarthy, research analyst at Kaiko. He added that for most investors, altcoins remain unfamiliar and could take time to gain interest in mainstream markets.
These latest fund applications follow what analysts call a highly favorable regulatory shift in the U.S., as the Securities and Exchange Commission reviews over 30 spot altcoin ETF applications. Despite this, Dilin Wu, a research analyst at Pepperstone Group, commented that while interest in Bitcoin ETFs from both retail and institutional investors is strong, "it’s unlikely to translate broadly into altcoin ETFs in the near term."
Nevertheless, Bloomberg analyst James Seyffart pointed out that some altcoins already perform well on derivatives markets. He said that large investors seeking diversification may boost volumes in products covering assets like Solana and Litecoin. "Will some of these other assets—Solana, XRP, Litecoin—get to millions and millions of assets and some decent trading volume and flows? Yes, I really do think that will happen," Seyffart stated.
As of now, Bitcoin holds the majority of the overall cryptocurrency market with $2.1 trillion out of $3.4 trillion in total market value, reflecting its dominant position and higher brand recognition compared to other digital coins. ETFs, which are funds traded on stock exchanges, offer investors access to cryptocurrencies without managing digital assets directly.
Interest in multi-coin or "basket" ETFs could also develop among institutions, as just under 20% of Ethereum ETF shares are owned by entities required to file regulatory disclosures in the U.S.
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