Author: Weilin, PANews
The long-dormant altcoin market has finally revived.
On December 2, the price of the old altcoin XRP reached a seven-year high, surpassing Solana in market capitalization, becoming a new focus of attention in the crypto market. Meanwhile, with the U.S. regulatory environment expected to become clearer, the demand for crypto ETPs (Exchange-Traded Products) has surged, and more institutions are applying for altcoin ETFs, such as Bitwise, Canary, 21Shares, and WisdomTree. In Europe, despite the asset management scale being far less than in the U.S., the regulatory framework has stabilized the position of crypto ETPs as investment tools, and more institutions are participating in the layout, such as Bitwise, 21Shares, and crypto research firm Kaiko.
Altcoin market revival: XRP market capitalization surpasses Solana.
On December 2, XRP's market capitalization surpassed Solana (SOL), rising to fourth place in the cryptocurrency market capitalization ranking. According to Coingecko, XRP rose 17.6% in 24 hours, reaching a price of $2.28, with a market capitalization of approximately $130.1 billion. This rise marks XRP's highest point in seven years.
The progress of Ripple's lawsuit with the SEC is the direct reason for the rise of XRP. On December 1, former CFTC Chairman Chris Giancarlo discussed the high-profile lawsuit filed by the U.S. SEC 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 whether the SEC would drop the lawsuit against Ripple, 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, which added 34,875,230 XLM tokens (worth approximately $3,923) to the trust, contributing to the net increase in the trust's total assets.
The data on U.S. Ethereum ETFs also reflects the arrival of the altcoin season. On November 29, U.S. spot Ethereum ETFs set a new record for daily capital inflow. According to Farside, nine spot Ethereum ETFs attracted a total of $332.9 million in inflows, 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 inflow of funds into Ethereum ETFs exceeded that of Bitcoin (BTC) ETFs on the same 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 being applied for.
Since the surge of Bitcoin spot ETF enthusiasm at the beginning of this year, participation from Wall Street giants like BlackRock and Fidelity marks further penetration of Bitcoin into the mainstream market, signifying a fusion of TradFi and Crypto. Meanwhile, the market is engaged in extensive discussions about which token might attract investments from Wall Street giants next. PANews previously reported that Solana was once considered one of the most likely candidates due to its market capitalization and potential.
Meanwhile, there are currently three ETF applications to hold the fourth-largest crypto asset, XRP. Bitwise, Canary, and 21Shares have all submitted applications for spot XRP ETFs. Additionally, global investment management company WisdomTree, known for its extensive ETF offerings, has submitted an application in Delaware to establish an XRP ETF, marking the growing interest of WisdomTree in expanding its presence in the digital currency sector. WisdomTree currently manages approximately $113 billion in assets globally.
Prior to this, the asset management company launched Wisdomtree Physical XRP (XRPW) on renowned European exchanges such as Deutsche Börse Xetra, SIX Swiss Exchange, and Euronext in Paris and Amsterdam. The company positioned XRPW as the most cost-effective European XRP investment product.
Surge in demand for crypto ETPs: Driven by both 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 general term for such products, the term ETP is sometimes used to refer specifically to exchange-traded debt securities.
James Butterfill, head of research at CoinShares, noted on November 22 that the total managed assets 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 comparison, related products in the U.S. manage approximately $88.78 billion in assets.
In the European market, the dominant position of crypto ETPs is solidified, 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 amount 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.
Currently, there is a lack of genuine cryptocurrency ETFs in Europe due to the restrictions of the UCITS (Undertakings for Collective Investment in Transferable Securities) regulations. The UCITS rules impose high diversification requirements on funds, limiting the issuance of single-asset ETFs. For example, UCITS diversification requirements state 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 there is a need to update UCITS rules and focusing on cryptocurrency assets. However, the purpose of this action seems to be to determine whether more rules and investor protections 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 overlooked. Companies such as CoinShares, Bitwise, and 21Shares have already established significant positions in this field, and with gradual regulatory easing in the future, 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, and VanEck's crypto ETP scale in Europe has reached 2 billion euros, but a large portion of this comes from individual investors, with low participation from institutional investors; wealth management companies have not allocated, and they have not even started to act. In addition, 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, following the results of the U.S. elections, the situation changed rapidly. In November, institutional issuers of crypto ETPs made many new moves. 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 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 its 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 cryptocurrency 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 Bitwise Physical XRP ETP.'
On November 28, Swiss wealth management company 21Shares added four types of 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 such as Amsterdam and Paris.
Overall, recent altcoins like XRP are receiving unprecedented attention, and the narrative around 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, propelling the market further toward maturity.