Bitcoin pulls back, altcoin ETFs surge.
The bull market craze is still spreading. Although Bitcoin has surged and fallen, Ethereum has reversed its decline and exceeded US$3,600. Defi, Layer 2 and other sectors have experienced general gains, and the altcoin market has finally begun to glow with new life. But a few days ago, the situation was very different. At that time, Bitcoin was close to $100,000, altcoins were wailing everywhere, and the market was struggling to survive.
Copycats are bleak, but Wall Street is thinking about it. With unprecedented regulatory benefits, Wall Street is eyeing altcoin ETFs, which has also given a winter boost to the long-dormant altcoin market.
Just a week ago, Bitcoin continued to break through and hit $99,000, making headlines in major media, but the usually active community was rarely silent. In this round of bull market led by institutions, most market participants did not experience liquidity overflow. Instead, the altcoins they held were continuously sucked by Bitcoin, showing a downward trend. Compared with the vigorous bull market propaganda, participants were quite disappointed. There is a feeling of bitterness in the heart that is difficult to express.
A typical example is Ethereum. Compared with other altcoins, Ethereum is already a recognized mainstream currency. However, in terms of price trends, the relative growth rate is far less than that of Bitcoin. The exchange rate between Ethereum and Bitcoin has been in the It continued to decrease, from 0.053 to the lowest level of 0.032, and it did not start to rebound until recently. This is true even for Ethereum, and even more so for other currencies.
Source: PANews
But just recently, the dormant altcoin market seems to have come alive. Coins such as $SOL, $XRP, LTC and $Link were the first to launch last weekend. Solana’s DEX’s average daily trading volume exceeded $6 billion, and $XRP soared to $1.63. This morning, Ethereum rose strongly and exceeded US$3,600. The altcoin sector experienced general gains, and the Defi sector rose by 8.47% in 24 hours.
When it comes to the reasons for the rise of copycats, in addition to the positive sentiment brought about by the bull market, Wall Street has contributed a lot, and ETFs are the most intuitive representation.
Tracing back to the beginning of this bull market, 11 Bitcoin spot ETFs sparked a craze. The entry of Wall Street giants such as BlackRock and Fidelity promoted the mainstreaming of Bitcoin, and also rapidly lowered the threshold for market participation in the crypto market. At that time, Bitcoin and Ethereum spot ETFs had been approved successively, and the market had different opinions on the next token that would make Wall Street excited. Due to market value and capital considerations, Solana was once the most popular currency.
On June 27, asset management giant VanEck took the lead and submitted an S-1 form for the "VanEck Solana Trust" to the SEC. The next day, 21Shares followed suit and submitted an S-1 application. The $SOL ETF hype came to a head on July 8 when Chicago Options Exchange Cboe officially filed a 19b-4 for VanEck and 21Shares’ Solana ETF.
The good times did not last long, and the SEC’s tough stance quickly cooled altcoin ETFs. In August, market news reported that CBOE had removed the 19b-4 applications for two potential Solana ETFs from the "Pending Rules Changes" page of its website, and analysts bluntly stated that "there is no hope of passing."
But now, the market is still there, but the situation is completely different. On November 22, Cboe BZX Exchange proposed to list and trade four Solana-related ETFs on its platform, according to a Cboe BZX exchange filing. The ETFs are sponsored by Bitwise, VanEck, 21Shares and Canary Funds and are classified as “commodity-based trust funds” and are filed pursuant to Rule 14.11(e)(4). If the SEC formally accepts the application, the final approval deadline is expected to be in early August 2025.
Not just Solana, more ETFs are on the way. Just in the past month, the crypto investment company Canary Capital has submitted applications for spot ETFs in three currencies, including $XRP, $LTC, and $HBAR, to the U.S. SEC. According to ETF Store President Nate Geraci, at least one issuer is currently trying to apply for ADA (Cardano) or AVAX (Avalanche) ETFs.
Source:X
The emergence of altcoin ETFs has triggered widespread heated discussions, and the inflow of funds from far away has made the market boiling. Is the Wild West of crypto ETFs really coming?
From an objective perspective, looking back at the previous approval processes for Bitcoin and Ethereum, cryptocurrencies need to meet two major implicit requirements to be approved as spot ETFs: first, they are not explicitly classified as securities by the China Securities Regulatory Commission; second, they need to have leading indicators. Prove market stability and non-manipulation. The typical feature is that the token can be traded on the Chicago Mercantile Exchange (CME) in the United States, that is, the futures market is launched first. From this point of view, except for Bitcoin and Ethereum, there seems to be no one in the current encryption market that meets the standards. Approval of more centralized currencies is even more difficult, especially $SOL. Not only is it highly centralized, it has also been explicitly listed as a security in the US SEC’s accusation against Binance.
But despite this, the market is still positive about the approval of ETFs for $SOL and $XRP. Bloomberg ETF analyst James Seyffart, who is authoritative in the ETF industry, believes that the decision-making approval timeline for $SOL, $XRP, LTC and $HBAR ETFs may be extended to the end of 2025, and the SEC may approve Solana-related transactions within two years. ETF. ETF Store President Nate Geraci is even more optimistic, saying that there is a high chance that the Solana ETF will be approved before the end of next year.
Behind the optimism, there is naturally information to support it, and the core factor points to the incoming President Trump. Trump’s commitment to encryption is being actively fulfilled, and changes in the internal and external regulatory environment have given the cryptocurrency industry stronger confidence.
In terms of industry supervision, the SEC, the main regulatory authority for cryptocurrency, is about to undergo a change. The current SEC Chairman Gary Gensler voluntarily abdicated and announced that he would resign on January 20, 2025, the day Trump officially took office. This finally pressed the pause button on the SEC’s strict supervision in recent years. According to statistics, during his tenure, Gensler took enforcement actions against multiple entities such as Coinbase, Kraken, Robinhood, OpenSea, Uniswap, MetaMask, etc., completed thousands of enforcement cases, and recovered approximately US$21 billion in fines. He is well-known in the industry of crypto opponents.
Although the next SEC chairman has not yet been selected, people familiar with the matter said that former SEC commissioner Paul Atkins may succeed Gary Gensler. At a time when the dispute over confidential currency securities and commodities is becoming increasingly fierce, there are also rumors that the Trump administration hopes to expand the power of the Commodity Futures Trading Commission (CFTC) and strengthen its regulatory power over the digital asset industry. If this move is realized, the identification of security attributes of crypto assets may be weakened.
From the perspective of the broader external environment, the Trump administration can be called a gathering place for cryptocurrency players. Among all the cabinet ministers selected in the new Trump administration, in addition to names familiar to the market such as Musk and Howard Lutnick, Treasury Secretary Scott Bessent, National Security Advisor Michael Waltz, Director of National Intelligence Tulsi Gabbard, Commerce Secretary Howard Five members, including Lutnick and Secretary of Health and Human Services Robert F. Kennedy Jr., are all crypto supporters. Among them, Waltz, Lutnick, and Gabbard all actually hold cryptocurrencies. Lutnick is a super fan of Bitcoin, not only holding hundreds of millions of dollars Bitcoin, its subsidiary Cantor Fitzgerald has provided custody services for Tether for many years.
It is obvious that the composition of this government is completely different from before. Since the superstructure is mostly supporters, the supervision of cryptocurrency will inevitably show a loose trend. If the comprehensive supervision of crypto assets is completed during the term of this government, structure, and the direction of subsequent industry supervision will be clearer.
In addition to supervision, Trump's companies have targeted business opportunities earlier. Recently, it has taken frequent actions and is committed to broadening the territory of the encryption industry through investment and financing. According to market sources, Trump Media Technology is negotiating with Intercontinental Exchange (ICE) to acquire the cryptocurrency exchange Bakkt. Just a few days ago, Trump Media Technology Group submitted an application for a cryptocurrency payment service called Truth Fi, planning to get involved in the cryptocurrency payment industry. Corporate trends once again reflect the president’s positive attitude toward encryption.
It is precisely based on the above factors that the market has rekindled hopes for altcoin ETFs. After all, with the end of the SEC chairman, the securities debate surrounding altcoins is expected to stop, laying an initial foundation for the realization of ETFs.
On the other hand, even if the direction of altcoin ETFs is unpredictable, Wall Street is unwilling to give up on this huge market of more than 3 trillion. Traditional institutions are building new investment products and derivatives around crypto assets to facilitate investors to include crypto assets in their assets. combination.
Sui Chung, who runs crypto index provider CF Benchmarks, said mainstream investors will build direct general exposure to the trend through spot Bitcoin ETFs, as well as customize exposure to the asset class through additional products. Among these, the most popular include those involving commodity futures that are tied to cryptocurrencies and earn income, as well as those that offer downside protection through options. Currently, the company is planning to launch Nasdaq Bitcoin Index options.
John Davi, chief investment officer of Astoria Portfolio Advisors, also mentioned that he is currently considering adding Bitcoin exposure to the ETF model portfolio he runs.
Generally speaking, although the current craze for copycat ETFs is still difficult to realize under the current regulatory background, from a long-term perspective, with the liberalization of regulations and the increase in investor interest, institutions will conduct in-depth research out of considerations of traffic acquisition and market competition. Cryptoassets will become an objective reality. On the product side, institutions will no longer be limited to Bitcoin and Ethereum. The productization and standardization of encrypted assets will be further strengthened. Derivative financial products may usher in a blowout, aiming to clear the barriers for investors to enter. It is foreseeable that investors will have more ways to invest in cryptocurrency-related products.
In addition to new products yet to come, existing ETFs will also benefit from this trend. Take the Ethereum spot ETF as an example. For a long time, the capital inflow of the Ethereum spot ETF has been weaker than that of Bitcoin. In terms of data, as of November 27, the net inflow of Ethereum spot ETF funds was approximately US$240 million, while the net inflow of Bitcoin spot ETF was as high as US$30.384 billion. The two are far apart.
Regarding the reasons, Ethereum is already at a disadvantage compared to Bitcoin due to differences in value firmness and positioning, and the rejection and restriction of the core staking function by the SEC has once again diluted investors' enthusiasm. To explain in terms of cost, if investors hold Ethereum directly, they can obtain a staking return of close to 3.5%. However, if they hold institutional ETFs, they will not only be unable to obtain this risk-free return, but will also have to pay the issuer an additional 0.15 to 2.5%. management fees.
However, with the regulatory changes, Ethereum spot ETFs may not necessarily have no connection with pledges. After all, the attitude of the SEC, which had previously firmly opposed pledges, has changed, and there is also a precedent for its launch in Europe. Recently, European ETP issuer 21Shares AG announced the addition of staking functionality to its Ethereum core ETP product.
Of course, although ETFs are good, the actual capital inflows need to be examined. Even Ethereum’s appeal to traditional capital is very limited. Grayscale’s Solana Trust has total assets of only US$70 million. The investment purchasing power of altcoins does not seem to be as optimistic as imagined. Affected by this, Robert Mitchnik, head of BlackRock's digital assets department, once mentioned that the company has little interest in other encryption products other than Bitcoin and Ethereum.
But no matter how the follow-up approval progresses, the hype around Shanzhai ETFs has already begun. For the long-suffering Shanzhai market, this shot in the arm comes too timely.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reproduced with permission from: (PANews)
Original author: Gyro Finance
“Wall Street is starting to play copycat! These 4 currencies have all applied for ETFs. Is the altcoin boom coming? 』This article was first published in "CryptoCity"
