Emerging cryptocurrency exchange-traded products (ETP) could attract significant new investment if approved, according to forecasts by investment bank JPMorgan.
Forecast for Solana and XRP ETFs
Many investors are hopeful for the approval of the first Solana (SOL) and XRP (XRP) exchange-traded funds, with expectations of a more crypto-friendly regulatory environment in the U.S. after President-elect Donald Trump takes office on January 20.
According to a report shared by BitcoinNews on January 13, JPMorgan predicts that SOL and XRP ETPs could outperform Ether (ETH) ETFs in the first six months of trading.
"Applying these 'adoption' ratios to SOL and XRP, we see SOL attracting $3 billion to $6 billion in net new assets and XRP gathering $4 billion to $8 billion in net new assets," the report stated.
SOL and XRP ETPs could attract $3 billion - $8 billion. Source: JP Morgan
BTC ETFs and the Growth Potential of Cryptocurrencies
This forecast comes on the heels of the first anniversary of the U.S. Bitcoin ETFs (BTC), with total holdings nearing $110 billion as of January 2, according to a BitcoinNews report.
New cryptocurrency-based ETFs could drive fundamental altcoins to new ATHs. For Bitcoin, ETFs accounted for around 75% of new investment when Bitcoin returned to the $50,000 mark on February 15, less than a month after the BTC spot ETFs launched on January 11.
Uncertain Adoption Rates of Altcoin ETPs Due to Volatile Investor Demand
While the prospect of a SOL or XRP-based ETF has garnered significant interest from investors, these forecasts are based on the adoption rates of Bitcoin and Ether ETFs.
Bitcoin ETFs have seen a 6% adoption rate as the ETFs have attracted around 6% of Bitcoin's total market capitalization. Ether ETFs have seen a 3% adoption rate in the first six months.
However, the volatile demand for altcoins among investors makes it challenging to predict the performance of the next ETFs, according to the JPMorgan report:
"Beyond a few key Tokens (BTC, ETH, SOL), the volatility of the crypto market is driven by investor sentiment and new trending coins that can attract attention for a short period."
"We do not see Tokens with limited depth being able to successfully organize an ETP," the report stated.
SOL ETF Nearing SEC Decision by End of January
Several major asset managers have filed for a Solana ETF, including VanEck, Grayscale, 21Shares, Bitwise, and Canary Capital.
The U.S. Securities and Exchange Commission is expected to provide preliminary decisions on these applications by the end of January 2025. Grayscale's application is facing a deadline on January 23, with other applications expected to receive decisions on January 25.
Alejo Pinto, the founder of the Solana layer-2 network Lumio, said that ETF approval could significantly impact the price of Solana.
"Given the still very high uncertainty, the approval of a U.S. ETF would have a positive impact on the price of Solana as this possibility is still low and therefore not priced in yet," he said.
