Following the success of Bitcoin and Ethereum spot exchange-traded funds (ETFs) in the U.S., asset managers are now pursuing ETFs focused on smaller cryptocurrencies such as Solana, XRP, and Dogecoin. Bloomberg analysts estimate over a 90% chance that some altcoin ETFs will begin trading this year.
Bitcoin ETFs have set records with 12 funds managing over $130 billion, while nine Ethereum ETFs have attracted approximately $10 billion in assets. This favorable regulatory climate has encouraged more than 30 spot altcoin ETF applications.
Analysts are divided on the appeal of altcoin ETFs. Adam McCarthy of Kaiko notes that while Bitcoin is widely recognized, altcoins remain unfamiliar to many traditional investors. He suggests it will take time for these products to gain mainstream acceptance.
Dilin Wu from Pepperstone Group adds that the strong interest in Bitcoin ETFs may not immediately extend to altcoin ETFs, particularly among retail and institutional investors. McCarthy also points out that non-crypto investors may find altcoin funds difficult to understand.
Conversely, Bloomberg’s James Seyffart highlights robust altcoin activity in derivatives markets and predicts that ETFs for coins like Solana, XRP, and Litecoin will attract significant assets and trading volume. He believes institutional investors seeking diversified crypto exposure will drive demand, noting that nearly 20% of Ethereum ETF shares are held by entities required to file 13Fs, indicating institutional and hedge fund participation.
ETFs offer a way for investors to participate in the crypto market without directly handling digital assets or dealing with complexities like cold storage.