Author: Weilin, PANews
The long-dormant altcoin market has finally revived.
On December 2, the price of the long-standing altcoin XRP hit a seven-year high, surpassing Solana's market cap, becoming a new focus of attention in the crypto market. Meanwhile, as the U.S. regulatory environment is expected to become clearer, the demand for crypto ETPs (Exchange Traded Products) has surged, with more institutions entering the application process for altcoin ETFs, including Bitwise, Canary, 21Shares, and WisdomTree. In Europe, although the asset management scale is far less than that of the U.S., the positioning of crypto ETPs as investment tools has solidified due to regulatory frameworks, with more institutions participating in the layout, such as Bitwise, 21Shares, and crypto research firm Kaiko.
Altcoin market recovery: XRP's 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 a price of $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 driving the rise of XRP. On December 1, former CFTC chairman Chris Giancarlo discussed the highly publicized SEC lawsuit against Ripple regarding XRP in an interview. Giancarlo believes that the SEC should reconsider its actions, especially in light of recent legal outcomes and the potentially changing regulatory environment. When asked whether the SEC would drop the Ripple lawsuit, Giancarlo said: 'I think they should... I bet they will.'
Additionally, driven by altcoins like XLM (Stellar) and XRP, the market capitalization of Grayscale's portfolio has increased by 85% over the past month. The surge in XLM's price is partly attributed to Grayscale's recent submission of a 10-K filing for its Grayscale Stellar Lumens Trust, in which 34,875,230 XLM tokens (with a total value of about $3,923) were added to the trust, contributing to a net increase in the trust's total assets.
Data on U.S. Ethereum ETFs also reflect the arrival of altcoin season. On November 29, the U.S. spot Ethereum ETF set a new record for single-day fund inflows. According to Farside, nine spot Ethereum ETFs attracted a total of $332.9 million in fund inflows, surpassing the previous record of $295.5 million set on November 11, an increase of $37.4 million. Multiple cryptocurrency commentators pointed out that on November 29, the fund inflow for Ethereum ETFs exceeded that of the spot Bitcoin (BTC) ETFs for that day, which was $320 million.
Felix Hartmann, founder of Hartmann Capital, believes this is a signal that Wall Street has 'officially joined' the altcoin rotation.
Institutional entry, more altcoin ETFs are in the application process
Since the Bitcoin spot ETF frenzy began earlier this year, the participation of Wall Street giants like BlackRock and Fidelity signifies further penetration of Bitcoin into the mainstream market and indicates a convergence of TradFi and Crypto. Meanwhile, there has been extensive discussion in the market about which token might attract investment from Wall Street giants next; PANews previously introduced Solana as one of the most likely candidates due to its market cap and potential.
Currently, there are three ETF applications for holding the fourth largest crypto asset, XRP. Bitwise, Canary, and 21Shares have all submitted spot XRP ETF applications. Additionally, global investment management company WisdomTree, known for its wide range of ETFs, has submitted an application in Delaware to establish an XRP ETF, marking WisdomTree's growing interest in expanding its presence in the digital currency space. WisdomTree currently manages about $113 billion in assets globally.
Prior to this, the asset management company launched Wisdomtree Physical XRP (XRPW) on renowned 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 drive from the U.S. and European markets
ETP is a generic term that includes various types such as ETFs (Exchange Traded Funds), ETNs (Exchange Traded Notes), and ETCs (Exchange Traded Commodities). While ETP is a collective term for such products, the term ETP is sometimes also used to refer to debt securities traded on exchanges.
On November 22, CoinShares' research director James Butterfill pointed out that the total assets under management of digital asset ETPs have surpassed $150 billion for the first time. According to CoinShares, digital asset investment products listed in Germany, Sweden, and Switzerland manage approximately $13.64 billion in assets. In contrast, related products in the U.S. manage about $88.78 billion.
In the European market, the dominant position of crypto ETPs is solid, with increasing institutional participation. As of November 28, there are a total of 221 cryptocurrency ETPs in the European market, managing assets (AUM) of $18.132 billion, with a net inflow of $549 million over 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 restrictions of the UCITS (Undertakings for Collective Investment in Transferable Securities) regulations in Europe, there is currently a lack of true cryptocurrency ETFs. 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) with investigating whether UCITS rules need to be updated and focusing on crypto assets. However, the purpose of this move seems to be to determine whether more rules and investor protections are needed, rather than expanding the types of qualified products.
Even so, the scale and development potential of the European crypto ETP market should not be overlooked. Companies such as CoinShares, Bitwise, and 21Shares have already established significant positions in this field, and as regulations gradually loosen, the development potential for crypto ETFs in the European market is enormous.
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, with the scale of VanEck's crypto ETPs in Europe reaching €2 billion, a significant portion of which comes from individual investors, with low institutional participation; wealth management companies have not allocated funds, and they have not even started taking action. In addition, Jan van Eck noted that very few private banks actually approve investments in Bitcoin or Ethereum, and there are no significant moves regarding other crypto assets.
However, as the results of the U.S. elections emerged, the situation changed rapidly. Institutional issuers of crypto ETPs made many new moves in November. On November 12, crypto research firm Kaiko announced the acquisition of European cryptocurrency index provider Vinter, aiming to expand Kaiko's cryptocurrency data market and enhance the services provided to asset managers and institutional clients. Kaiko and Vinter will jointly offer regulated products such as derivatives, ETFs, and ETPs.
On November 27, Ripple announced it would invest in the rebranded 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 (with the trading code GXRP) is highly consistent with the growing interest in ETPs related to crypto assets.
He stated: 'As the cryptocurrency regulatory environment in the U.S. finally becomes clear, 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: PYTH, ONDO, RNDR, and NEAR, covering price oracles, asset tokenization, decentralized computing, and artificial intelligence. All four ETPs will be traded on exchanges in cities such as Amsterdam and Paris.
Overall, recent altcoins like XRP have received unprecedented attention, and the narrative around altcoin ETFs could become the next growth driver, injecting new vitality into crypto assets. As the regulatory environment becomes clearer, crypto ETPs, as a regulated and convenient investment tool, are expected to continue attracting more investors, pushing the market toward further maturity.
