The bull market frenzy is still spreading. Although Bitcoin has risen and fallen, Ethereum has turned around and broken through $3,600, with multiple sectors like DeFi and Layer 2 experiencing widespread gains. The counterfeit coin market has finally begun to show signs of revival. However, just a few days ago, the situation was quite different. At that time, Bitcoin was nearing $100,000, while counterfeit coins were in disarray, with the market in a state of desperate survival.
The counterfeit market is bleak, but Wall Street is showing interest. In an unprecedented favorable regulatory environment, Wall Street has turned its attention to counterfeit coin ETFs, thus providing a much-needed boost to the long-silent counterfeit market.
Just a week ago, Bitcoin continuously broke through to reach $99,000, making headlines across major media outlets, yet the usually vibrant community has rarely shown such silence. In this round of bull market dominated by institutions, most market participants have not benefited from the liquidity spillover; instead, the counterfeit coins they hold have been continuously drained by Bitcoin, presenting a downward trend. Compared to the grand bull market promotions, participants feel a sense of unexpressed bitterness.
A typical example is Ethereum, which, compared to other counterfeit coins, is already recognized as a mainstream currency. However, in terms of price trends, its relative growth is far inferior to that of Bitcoin. The exchange rate between ETH and BTC has continuously decreased this year, dropping from 0.053 to a low of 0.032, only recently beginning to rebound. If Ethereum is like this, other coins are even less promising.
However, just recently, the once-dormant counterfeit coin market seems to have come back to life. Coins like SoL, XRP, LTC, and Link started to rally last weekend, with Solana's DEX daily trading volume exceeding $6 billion, and XRP rising to $1.63. This morning, Ethereum surged past $3,600, and the counterfeit coin sector experienced a widespread rally, with the DeFi sector rising by 8.47% in 24 hours.
Regarding the reasons for the rise of counterfeit coins, aside from the positive sentiment brought by the bull market, Wall Street has played an indispensable role, and ETFs are the most direct representation of this.
The emergence of counterfeit coin ETFs has sparked widespread discussion, and the influx of distant funds has further ignited the market. Is the wild west of crypto ETFs really about to arrive?
From an objective perspective, looking back at the previous approval processes for Bitcoin and Ethereum, the approval of cryptocurrency spot ETFs basically needs to meet two major implicit requirements: first, they must not be explicitly classified as securities by the SEC; second, there must be leading indicators proving market stability and non-manipulability, with a typical feature being that the tokens can be traded on the Chicago Mercantile Exchange (CME), meaning they must first be listed in the futures market. In this regard, aside from Bitcoin and Ethereum, there seem to be no other qualifying candidates in the crypto market at present. The approval of more centralized currencies is even more fraught with difficulties, especially for SOL, which is not only prominently centralized but was also explicitly listed as a security in the SEC's accusations against Binance.
Nevertheless, the market remains optimistic about the ETF approvals for SOL and XRP. James Seyffart, an authoritative ETF analyst at Bloomberg, believes that the decision timeline for SOL, XRP, LTC, and HBAR ETFs may extend to the end of 2025, and the SEC might approve Solana-related ETFs within two years. ETF Store President Nate Geraci is even more optimistic, stating that before the end of next year, the Solana ETF will likely receive approval.
Behind the optimism is naturally the support of information, with the core factor pointing to the soon-to-be-inaugurated President Trump. Trump's commitment to cryptocurrency is actively being fulfilled, and the changes in the internal and external regulatory environment have given the cryptocurrency industry stronger confidence.
From the perspective of industry regulation, the SEC, the main regulatory body for cryptocurrencies, is about to undergo a change.
From a broader external environment perspective, the Trump administration can be seen as a gathering place for cryptocurrency players. The regulation of cryptocurrencies will inevitably trend towards relaxation, and if a comprehensive regulatory framework for crypto assets is established during this administration's term, subsequent industry regulatory directions will become clearer.
Based on the above factors, the market has rekindled hope for counterfeit coin ETFs. After all, with the end of the SEC chairman's tenure, the rhetoric surrounding counterfeit coins is expected to subside, laying a preliminary foundation for the realization of ETFs.
On the other hand, even if the trajectory of counterfeit coin ETFs is unpredictable, Wall Street is unwilling to give up this vast market worth over $30 trillion. Traditional institutions are building new investment products and derivative tools around crypto assets to facilitate investors in incorporating crypto assets into their portfolios.
Although the current wave of counterfeit ETFs still faces challenges under the current regulatory backdrop, from a long-term perspective, as regulations loosen and investor interest increases, institutions' deeper research into crypto assets will become an objective reality, driven by the need for traffic acquisition and market competition.
Institutions will no longer be limited to Bitcoin and Ethereum. The productization and standardization of crypto assets will be further strengthened, and derivatives may usher in a boom aimed at clearing the obstacles for investors to enter the market. It is foreseeable that investors will have more ways to invest in products related to cryptocurrencies.
Beyond new products that have yet to be launched, existing ETFs will also benefit from this trend. Taking Ethereum spot ETFs as an example, for a long time, the capital inflow into Ethereum spot ETFs has been weaker than that of Bitcoin. As of November 27, data shows that the net inflow of Ethereum spot ETFs was about $240 million, while the net inflow of Bitcoin spot ETFs reached a staggering $30.384 billion, with a significant gap between the two.
The reason lies in the fact that Ethereum inherently has disadvantages compared to Bitcoin due to its value stability and positioning differences, and the SEC's rejection of its core staking function has further diluted investors' enthusiasm. In cost terms, if investors directly hold ETH, they can obtain nearly 3.5% staking returns, but if they hold institutional ETFs, they not only cannot obtain this risk-free return but also have to pay additional management fees ranging from 0.15% to 2.5% to the issuers.
However, with the change in regulation, Ethereum spot ETFs may not be unrelated to staking, after all, the SEC's previously firm rejection of staking has changed.
Of course, while ETFs are appealing, the actual capital inflow remains to be seen. Even Ethereum's appeal to traditional capital is quite limited; the total assets of Grayscale's Solana Trust are only $70 million, indicating that the investment purchasing power for counterfeit coins may not be as optimistic as imagined. Institutions show little interest in crypto products other than Bitcoin and Ethereum.
But regardless of how subsequent approvals progress, the speculation surrounding the counterfeit ETF has already begun. For a counterfeit market that has long been ailing, this strong stimulus is indeed very timely.
