Author: Weilin, PANews
The long-silent altcoin market has finally revived.
On December 2, the price of the long-established altcoin XRP reached its highest level in seven years, surpassing Solana's market capitalization, becoming a new focal point of attention in the crypto market. Meanwhile, with the U.S. regulatory environment expected to become clearer, demand for crypto ETPs (exchange-traded products) has surged, 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 that of the U.S., influenced by the regulatory framework, the status of crypto ETPs as investment tools has solidified, and more institutions are participating in the layout, such as Bitwise, 21Shares, and crypto research company Kaiko.
Altcoin market recovery: XRP surpasses Solana in market value
On December 2, XRP's market capitalization surpassed Solana (SOL), rising to 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 capitalization 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 a direct reason driving the rise of XRP. On December 1, former CFTC Chairman Chris Giancarlo discussed the highly watched SEC lawsuit 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 abandon the Ripple lawsuit, Giancarlo stated: I think they should... I bet they will.
Additionally, driven by altcoins like XLM (Stellar) and XRP, Grayscale's portfolio market value 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, boosting the net increase in the trust's overall assets.
The data from the U.S. Ethereum ETF also reflects the arrival of the altcoin season. On November 29, the U.S. spot Ethereum ETF set a new record for daily fund inflows. According to Farside data, 9 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. Several cryptocurrency commentators noted that on November 29, the inflow of funds into the Ethereum ETF exceeded that of the spot Bitcoin (BTC) ETF 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 in the application process
Since the Bitcoin spot ETF craze began earlier this year, the participation of Wall Street giants like BlackRock and Fidelity marks further penetration of Bitcoin into the mainstream market, indicating a fusion of TradFi and Crypto. Meanwhile, the market has engaged in extensive discussions on which token might attract Wall Street giants' investments next. PANews previously discussed Solana, which was seen as one of the most likely choices due to its market value and potential.
Currently, there are also three ETF applications holding the fourth largest crypto asset, XRP. Bitwise, Canary, and 21Shares have all submitted spot XRP ETF applications. In addition, WisdomTree, a global investment management company renowned 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 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 crypto ETP demand: Dual push from the U.S. and European markets
ETP is a generic term that includes various types, such as ETF (exchange-traded funds), ETN (exchange-traded notes), and ETC (exchange-traded commodities). While ETP is a general term for such products, the term ETP is sometimes also used to refer to debt securities exchange-traded products.
CoinShares Research Director James Butterfill noted on November 22 that the total assets under management of digital asset ETPs have exceeded $150 billion for the first time. According to CoinShares data, digital asset investment products listed in Germany, Sweden, and Switzerland manage approximately $13.64 billion in assets. In contrast, related products in the United States manage 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 221 crypto 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 limitations of the European UCITS (Undertakings for Collective Investment in Transferable Securities) regulations, there is currently a lack of truly crypto ETFs in Europe. The UCITS rules require a high level of diversification for funds, restricting the issuance of single-asset ETFs. For example, UCITS diversification requirements include that no single asset may 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 UCITS rules need to be updated 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 qualified products.
Nevertheless, the scale and development potential of the European crypto ETP market cannot be overlooked. Companies such as CoinShares, Bitwise, and 21Shares have already established important positions in this field, and with the gradual loosening of regulations in the future, the development potential of crypto ETFs in the European market is immense.
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 scale of crypto ETPs in Europe has reached €2 billion, but a large portion of it comes from individual investors, with low participation from institutional investors. Wealth management companies have not allocated to them, and they have not even begun to act. In addition, Jan van Eck also mentioned that very few private banks actually approve investments in Bitcoin or Ethereum, nor are there any significant moves regarding other crypto assets.
However, following this, as the results of the U.S. elections emerged, the situation changed rapidly. Institutional issuers of crypto ETPs took many new actions in November. On November 12, crypto research company Kaiko announced the acquisition of European crypto index provider Vinter, aiming to expand Kaiko's crypto data market and enhance 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 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 said: "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 ETPs to its European products, namely PYTH, ONDO, RNDR, and NEAR, involving 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 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 a regulated and convenient investment tool, are expected to continue attracting more investors, further maturing the market.
