Author: Weilin, PANews
The long-dormant altcoin market has finally revived.
On December 2, the price of the long-standing altcoin XRP reached a seven-year high, surpassing Solana's market cap, becoming a new focal point of attention in the crypto market. Meanwhile, as the regulatory environment in the U.S. is expected to clarify, the demand for crypto ETPs is surging, with more institutions entering to apply for altcoin ETFs, such as Bitwise, Canary, 21Shares, and WisdomTree. In Europe, although the asset management scale is far less than in the U.S., influenced by the regulatory framework, the status of its crypto ETPs as investment tools has been consolidated, with more institutions participating, such as Bitwise, 21Shares, and crypto research company Kaiko.
Altcoin market revival: XRP market cap surpasses Solana
On December 2, XRP's market cap surpassed Solana (SOL), jumping to fourth place in the cryptocurrency market cap rankings. According to Coingecko, XRP rose 17.6% in 24 hours, reaching $2.28, with a market cap of approximately $130.1 billion. This increase marks the highest point for XRP in seven years.
The progress of Ripple's lawsuit with the SEC is the direct reason for XRP's surge. On December 1, former CFTC Chairman Chris Giancarlo discussed the high-profile SEC lawsuit against Ripple regarding XRP in an interview this week. Giancarlo believes that the SEC should reconsider its approach, especially in light of recent legal outcomes and the potentially changing regulatory environment. When asked if the SEC would drop the Ripple lawsuit, Giancarlo stated: 'I think they should... I bet they will.'
In addition, driven by altcoins such as XLM (Stellar) and XRP, the market value of Grayscale's portfolio has increased by 85% over the past month. In particular, the surge in XLM's price is partly attributed to Grayscale's recent filing of a 10-K document for its Grayscale Stellar Lumens Trust, which added 34,875,230 XLM tokens (total value of approximately $3,923) to the trust, driving the net increase of the trust's overall assets.
Data from the U.S. Ethereum ETF also reflects the arrival of altcoin season. On November 29, the U.S. spot Ethereum ETF set a new record for single-day capital inflow. According to Farside data, nine spot Ethereum ETFs attracted a total of $332.9 million in capital inflow, surpassing the previous record of $295.5 million set on November 11, an increase of $37.4 million. Several cryptocurrency commentators noted that on November 29, the capital inflow for Ethereum ETFs exceeded that of the spot Bitcoin (BTC) ETFs that day, which was $320 million.
Felix Hartmann, founder of Hartmann Capital, believes this is a signal that Wall Street is 'officially joining' the altcoin rotation.
Institutional entry, more altcoin ETFs are being applied for
Since the surge of Bitcoin spot ETFs at the beginning of this year, the involvement of Wall Street giants like BlackRock and Fidelity marks further penetration of Bitcoin into the mainstream market, also indicating the fusion of TradFi and Crypto. Meanwhile, the market is extensively discussing the next token that could attract investment from Wall Street giants, with PANews previously reporting that Solana was once considered one of the most likely options due to its market value and potential.
At the same time, there are currently three ETF applications seeking to hold the fourth-largest crypto asset, XRP. Bitwise, Canary, and 21Shares have all submitted spot XRP ETFs. Additionally, global investment management company WisdomTree, known for its extensive ETFs, has submitted an application in Delaware to establish an XRP ETF, marking WisdomTree's increasing interest in expanding its footprint in the digital currency space. WisdomTree currently manages approximately $113 billion in assets globally.
Prior to this, the asset management company launched Wisdomtree Physical XRP (XRPW) on well-known European exchanges, including Deutsche Börse Xetra, SIX Swiss Exchange, and Euronext in Paris and Amsterdam. The company positions XRPW as the most cost-effective European XRP investment product.
Surge in demand for crypto ETPs: Dual driving forces from the U.S. and European markets
ETPs are a generic term that includes various types such as ETFs (exchange-traded funds), ETNs (exchange-traded notes), and ETCs (exchange-traded commodities). Although ETP is a collective term for such products, the term ETP is sometimes also used to refer to debt security exchange-traded products.
CoinShares research director James Butterfill pointed out on November 22 that the total assets under management of digital asset ETPs have first surpassed $150 billion. According to CoinShares data, digital asset investment products listed in Germany, Sweden, and Switzerland manage approximately $13.64 billion in assets. In contrast, the asset scale of related products managed in the U.S. is about $88.78 billion.
In the European market, the dominance of crypto ETPs is solid, with increasing institutional participation. As of November 28, there are a total of 221 crypto ETPs in the European market, managing assets (AUM) of $18.132 billion, with a net inflow of $549 million in the past six months. ETPs provide retail and institutional investors with a convenient, regulated, and low-cost way to invest in cryptocurrencies, helping investors avoid some potential volatility risks compared to directly purchasing crypto assets.
Due to the constraints of the European UCITS (Undertakings for Collective Investment in Transferable Securities) regulations, there is currently a lack of true cryptocurrency ETFs in Europe. The UCITS rules impose high diversification requirements on funds, limiting the issuance of single-asset ETFs. For example, UCITS diversification requirements include that no single asset can exceed 10% of the fund, and the underlying assets must be qualified financial instruments. In June 2023, the European Commission tasked the European Securities and Markets Authority (ESMA) to investigate whether the UCITS rules need updating and to focus on crypto assets. However, the aim of this move seems to be to determine whether more rules and investor protection are needed, rather than expanding the types of eligible products.
Even so, the scale and development potential of the European crypto ETP market cannot be ignored. Companies like CoinShares, Bitwise, and 21Shares have already established significant positions in this field, and as regulations gradually loosen, there is immense growth potential for crypto ETFs in the European market.
Institutional participation accelerates the transformation of the ETP market
As early as October 20, VanEck CEO Jan van Eck stated that the company currently has 12 token-based products trading in the European market, and that VanEck's crypto ETP scale in Europe has reached €2 billion, with a significant portion coming from individual investors, while institutional investor involvement remains low, and wealth management firms have not yet allocated assets; they have not even begun to take action. Additionally, Jan van Eck noted that very few private banks have truly approved investments in Bitcoin or Ethereum, nor have there been any significant moves regarding other crypto assets.
However, as the results of the U.S. elections are produced, the situation has changed rapidly. Institutional issuers of crypto ETPs have made many new moves in November. On November 12, crypto research firm Kaiko announced the acquisition of European cryptocurrency index provider Vinter, aimed at expanding Kaiko's cryptocurrency data market and enhancing the services offered to asset managers and institutional clients. Kaiko and Vinter will jointly provide regulated products such as derivatives, ETFs, and ETPs.
On November 27, Ripple announced an investment in the renamed Bitwise Physical XRP ETP Fund (formerly known as the 'European XRP ETP'). Ripple CEO Brad Garlinghouse stated that the decision to invest in the Bitwise fund (trading code: GXRP) is highly consistent with the growing interest in ETPs related to crypto assets.
He stated: 'As the U.S. cryptocurrency regulatory environment finally becomes clearer, this trend is expected to accelerate, further driving demand for crypto ETPs, such as the Bitwise Physical XRP ETP.'
On November 28, Swiss wealth management company 21Shares added four ETPs to its European products, namely PYTH, ONDO, RNDR, and NEAR, covering areas such as price oracles, asset tokenization, decentralized computing, and artificial intelligence. All four ETPs will be traded on exchanges in cities like Amsterdam and Paris.
Overall, recent attention on altcoins like XRP has reached unprecedented levels, and the narrative of altcoin ETFs may become the next growth driver, injecting new vitality into crypto assets. As the regulatory environment gradually clarifies, crypto ETPs, as a regulated and convenient investment tool, are expected to continue attracting more investors and further mature the market.
