Author: Weilin, PANews
The long-dormant altcoin market has finally revived.
On December 2, the price of the classic altcoin XRP reached a seven-year high, surpassing Solana and becoming the 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 applying for altcoin ETFs, such as Bitwise, Canary, 21Shares, and WisdomTree. In Europe, although the asset management scale is far less than that of the U.S., influenced by the regulatory framework, the status of crypto ETPs as investment tools has been solidified, with more institutions participating, such as Bitwise, 21Shares, and crypto research company Kaiko.
Altcoin market revival: XRP's market value surpasses Solana.
On December 2, XRP's market value surpassed Solana (SOL), jumping to the fourth place in the cryptocurrency market capitalization rankings. According to Coingecko data, XRP rose 17.6% within 24 hours, reaching a price of $2.28, with a market value 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 a direct reason for the rise of XRP. On December 1, former CFTC Chairman Chris Giancarlo discussed the high-profile lawsuit by the U.S. SEC against Ripple regarding XRP in an interview this week. Giancarlo believes the SEC should reconsider its approach, especially given recent legal outcomes and the potentially changing regulatory environment. When asked if the SEC would drop the Ripple lawsuit, Giancarlo said: I think they should... I bet they will.
Additionally, driven by altcoins such as XLM (Stellar) and XRP, the market value of Grayscale's portfolio has increased by 85% over the past month. The surge in XLM prices is partially attributed to Grayscale's recent 10-K filing with its Grayscale Stellar Lumens Trust, which added 34,875,230 XLM tokens (total value of approximately $3,923) to the trust, boosting the net increase in the trust's overall assets.
The data on U.S. Ethereum ETFs also reflects 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 collectively attracted $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 noted that on November 29, the inflow amount for Ethereum ETFs exceeded that of the spot Bitcoin (BTC) ETFs for the day, which was $320 million.
Felix Hartmann, founder of Hartmann Capital, believes this is a signal that Wall Street has 'officially joined' the rotation of altcoins.
Institutional entry, more altcoin ETFs are in application.
Since the beginning of this year, the surge in Bitcoin spot ETFs has marked a further penetration of Bitcoin into mainstream markets, with participation from Wall Street giants like BlackRock and Fidelity, also indicating a merger of TradFi and Crypto. Meanwhile, there has been extensive discussion in the market about the next tokens that might attract investment from Wall Street giants, with PANews previously reporting that Solana, due to its market cap and potential, was once seen as one of the most likely choices.
At the same time, there are currently three ETF applications to hold XRP, the fourth-largest crypto asset by market cap. Bitwise, Canary, and 21Shares have all submitted applications for 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 growing interest in expanding its presence 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 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.
Soaring demand for crypto ETPs: Driven by both 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 general term for such products, the term ETP is sometimes also used to refer to debt securities trading products.
James Butterfill, head of research at CoinShares, noted on November 22 that the total assets under management of digital asset ETPs have surpassed $150 billion for the first time. According to CoinShares data, the digital asset investment products listed in Germany, Sweden, and Switzerland manage approximately $13.64 billion in assets. In contrast, the related products in the U.S. manage approximately $88.78 billion in assets.
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 cryptocurrency ETPs in the European market, with assets under management (AUM) reaching $18.132 billion, and 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. Compared to direct purchases of crypto assets, ETPs can help investors avoid some potential volatility risks.
Due to the restrictions of the UCITS (Undertakings for Collective Investment in Transferable Securities) regulations in Europe, there is currently a lack of genuine cryptocurrency ETFs in Europe. 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 qualifying 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 cryptocurrency assets. However, the aim of this move seems to be to determine whether more rules and investor protections are needed, rather than to expand the types of qualifying 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 taken significant positions in this field, and with regulatory easing in the future, the potential for the development of crypto ETFs in the European market is enormous.
Institutional participation accelerates the transformation of the ETP market.
As early as October 20, Jan van Eck, CEO of asset management company VanEck, stated that the company currently has 12 token-based products trading in the European market, and the scale of VanEck's cryptocurrency ETPs 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 taking action. Moreover, Jan van Eck stated that very few private banks have genuinely approved investments in Bitcoin or Ethereum, and there are no significant initiatives in other crypto assets.
However, in the following period, with the results of the U.S. elections, the situation changed rapidly. Institutional issuers of crypto ETPs made many new moves in November. On November 12, crypto research company Kaiko announced the acquisition of European cryptocurrency index provider Vinter, aimed at expanding Kaiko's cryptocurrency data market and enhancing the services provided 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 '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 product line: 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 of altcoin ETFs may become the next growth driver, injecting new vitality into crypto assets. As the regulatory environment gradually clarifies, crypto ETPs, as regulated and convenient investment tools, are expected to continue attracting more investors and further mature the market.
