The Altcoin ETF is not gaining traction.
Compared to the market excitement during the approval process for Bit and ETH spot ETFs, the market sentiment surrounding Altcoin ETFs can only be described as minimal. However, five months ago, the market was still immersed in the bright prospects of the policy bull market, and the keen-sighted Wall Street institutions came to the Altcoin market, driving a round of price increases, with XRP and SOL at the forefront, becoming the new concept coins of Wall Street under regulatory tailwinds.
But now, the Altcoin ETF has ebbed, and while approval news is being reported frequently and capital institutions are flocking in, market attention is gradually declining.
To discuss the reasons, the current Altcoin ETF can only be blamed for not being born at the right time.
Since former President Trump announced the crypto strategic reserve, although it did not cause a significant price fluctuation, capital institutions have still spotted a new market - Altcoins. Looking at the current Altcoin ETFs, the team is gradually growing. On March 6, a new ETF application was submitted again, with Canary submitting an S-1 filing for the AXL ETF, Bitwise applying for the APT ETF, and VanEck also confirming the launch of the Avalanche ETF. As of now, more than 7 institutions have applied for ETFs related to 11 major cryptocurrencies, covering SOL, DOGE, LTC, SUI, XRP, APT, MOVE, HBAR, BONK, TRUMP, and ADA.
In terms of the applying institutions, SOL, which bears the title of "Ethereum killer", and the resource-rich XRP are the two cryptocurrencies with the most applying issuers, with 6 issuers each, reflecting the institutions' continued optimism about these two major cryptocurrencies. The issuers applying for SOL ETFs include Franklin Templeton, Grayscale, Bitwise, VanEck, 21Shares, and Canary Capital, while the issuers applying for XRP ETFs include Franklin Templeton, Grayscale, Bitwise, Canary Capital, 21Shares, and Wisdomtree. In addition to the above cryptocurrencies, LTC and DOGE each have two issuers, while other cryptocurrencies mostly have only a single institution applying.
In fact, in terms of Altcoin ETFs, the selected cryptocurrencies have become increasingly diverse, with some even appearing chaotic, apart from the relatively large-scale SOL, XRP, LTC, ADA, and DOGE, there are also numerous public chain tokens, and even the long-dormant DOT has been selected by 21Shares. And against the backdrop of MEME dominance, BONK and TRUMP, which are seen as strong camps, have also appeared in Rex Shares' ETF application.
Although there are many cryptocurrencies, in terms of the probability of approval, the more prominent the cryptocurrency, the greater the problems. The previous soft requirement of having a futures contract on the CME seems to have been untied with the relaxation of regulation, but the issue of securities attributes and pending lawsuits cannot be resolved overnight. After the approval of the ETH ETF, SOL is the cryptocurrency with the highest demand in the Altcoin sector, and the application time is also relatively early. According to the records, VanEck and 21Shares submitted the 19b-4 file as early as last June, but due to SOL's own securities attributes, the approval has not been successful. In August last year, VanEck and 21Shares' 19b-4 file was taken off the shelf at COBE, and in December last year, relying on the last bit of arrogance, former SEC Chairman Gary Gensler notified at least two SOL spot ETF applicants that their 19b-4 file was rejected, and until now, the SEC has only announced that it has accepted all issuers' SOL ETF spot applications.
XRP and SOL are basically on par, with Ripple's lawsuit like a bandage, lasting more than four years and still not resolved, to the extent that the Ripple CEO has been continuously donating political contributions to Trump and Congress, hoping to obtain litigation exemption and continue to expand the influence of XRP. The simple and crude donations have indeed brought benefits to XRP, and although it is at the stage of SEC acceptance and approval like SOL, Ripple's business in the US market has grown significantly. According to its CEO, Ripple's US transaction volume in the last six weeks of 2024 exceeded the total of the previous six months, and 75% of the new positions have been concentrated in the US.
As for other Altcoins, with the top ones still not approved, the probability of approval is also relatively limited, but there are two exceptions - LTC and DOGE. They have no securities history burden, and they belong to commodities, so there are no negative factors from the regulatory perspective, and the obstacles are relatively small. Especially for LTC, it is a POW public chain with the same mechanism as BTC, and although its market size is only $7.7 billion, it still has considerable market depth. DOGE is the top MEME, has become a cultural symbol, and with Musk's support, the probability of approval is naturally increased. For the above reasons, Bloomberg senior ETF analyst Eric Balchunas previously predicted that the possibility of a Litecoin ETF listing by the end of this year is the highest, reaching 90%, higher than Dogecoin (75%), Solana (70%), and XRP products (65%).
In terms of the approval progress, most ETFs are at the stage of being accepted but not yet approved. Reviewing the entire approval process, the issuers will first submit the S-1/S-3 form to the SEC, and then the exchange where the ETF is located will submit the 19b-4 form. According to the rules, the SEC will usually publish in the Federal Register after accepting the 19b-4 file and initiate a 21-day public comment period. During this time, the SEC can make multiple postponements, consultations, and reviews, but the time period will not exceed 240 days at most.
Looking at the most recent approval point, on March 12, SEC filings showed that the US Securities and Exchange Commission has delayed the approval of multiple spot cryptocurrency ETF applications, including Grayscale's Cardano ETF, Canary's XRP ETF, Canary's Solana ETF, Canary's Litecoin ETF, and VanEck's Solana ETF. Of course, from the perspective of Altcoin ETFs, the SEC's delay in ETF approval is foreseeable, and the core reason is that after the previous iron-fisted regulation, the new SEC chairman Paul Atkins nominated by Trump has not yet been confirmed by Congress, the leadership is not in place, and the rules and regulations cannot be implemented, so they can only suspend by postponing. Based on past experience, the transition from nomination to taking office usually takes about 2 months, and the market expects this new chairman to make his debut in March.
Although the approval process has been turbulent, in terms of the current regulation, the probability of approval is undoubtedly increasing, with even SOL and XRP, which are still in litigation, being included in the US digital asset strategic reserve, which, although not directly related to the approval, can also indirectly reflect that these cryptocurrencies are likely to be released from the SEC's restrictions.
However, in terms of market performance, the narrative of Altcoin ETFs seems to have lost its magic.
Going back five months ago, in November last year, institutions triggered a wave of Altcoin ETF applications, and the first-mover cryptocurrencies such as SOL, XRP, LTC, and HBAR quickly rose. In one month, XRP surged from $0.5 to $2.9, and successfully reached $3.4 on January 16th this year. SOL also followed a similar trajectory, rising from $160 to $264, and hitting a high of $295 on January 19th.
At that time in November, due to the overall rise of Altcoins, the long-drought market was like a heavy rain, and the slogan "Altcoin season is here" brought a glimmer of hope to the steadfast holders. But the dream was soon shattered, and by February, all Altcoins continued to decline, and the news of Altcoin ETFs could no longer drive the market, regardless of the progress of the approval.
Has the ETF narrative become ineffective? Not necessarily, otherwise the many holders would not be closely watching the ETF data, but the problem is that the current ETFs were not born at the right time. From the current financial market, the narrative of a single sector is difficult to sustain, as the world is betting on whether the US will fall into recession. The more Trump's tariff stick and geopolitical dance, the greater the macroeconomic uncertainty, and the greater the possibility of inflation and the US recession theory. At this point, even the government cannot guarantee that the US economy will not fall into recession, with the US Treasury Secretary today directly answering that "it cannot be guaranteed that the US economy will not fall into recession", a posture of drastic measures.
Under this panic, Bitcoin has shown a downward trend, fluctuating around $80,000-$83,000, while ETH is fighting a defensive battle at the $1,900 level, and SOL has fallen to $128, with the market reaching the junction of the bull and bear markets. In a market with insufficient liquidity, it is not easy to break out of the independent market trend, and the ETF is still in the approval process and has not been substantially approved, and the expectations brought about are not enough to change the trend, and can only be a long-term factor supporting the price bottom.
It is worth noting that even if the ETF is approved, the actual purchasing power is also worth discussing. The total net inflow of the current Ethereum spot ETF is only $2.5 billion, which is enough to prove that the market propaganda that "Altcoin will have billions of dollars of funds flowing in after approval" is not credible, and even if it is credible, it is not a matter of one day. After all, in theory, the market capitalization of the Altcoins that have already applied for ETFs is far less than that of Ethereum, and the largest market capitalization is XRP at $135.4 billion, while Ethereum's market capitalization has reached $229.1 billion.
On the other hand, the entry of Wall Street capital is not entirely a good thing, and the transfer of pricing power is inevitable. Taking Bitcoin as an example, the continuous decline in the price of Bitcoin is also due to the reduction of holdings of spot Bitcoin ETFs. The latest data shows that the US spot Bitcoin ETFs have reduced their Bitcoin holdings by 4.76% since February 6, 2025. From January 1 to February 6, these funds added about 56,802.86 Bitcoins to their balance sheets, but in the past 35 days, their holdings have decreased by 55,348.00 Bitcoins.
Of course, for Altcoins, the narrative is far more important than pricing power. Institutions can bring real money and traffic, and holders can only hope that institutions will look at them with different eyes, falling into the love-hate relationship with capital. For most cryptocurrencies, getting through the ETF is like putting one foot into Wall Street, and connecting with Wall Street is also a step closer to getting the "Made in the USA" label, and the chances of being included in the reserve through operation may also increase, at least during the four-year term of Trump, they can do better than other Altcoins.
