Author: Weilin, PANews
The long-dormant altcoin market has finally recovered.
On December 2, the veteran altcoin XRP reached its highest price in seven years, surpassing Solana in market capitalization and becoming a new focus of widespread attention in the crypto market. At the same time, as the regulatory environment in the United States is expected to become clearer, the demand for crypto ETPs (exchange-traded products) has surged, and more institutions are applying for altcoin ETFs, such as Bitwise, Canary, 21Shares, and WisdomTree. In Europe, although the asset management scale is far behind the United States, due to the regulatory framework, the position of crypto ETPs as an investment tool has been consolidated, and more institutions are also participating in the layout, such as Bitwise, 21Shares, and the crypto research company Kaiko.
Altcoin market recovery: XRP market cap surpasses Solana
On December 2, the market capitalization of XRP surpassed Solana (SOL), rising to the fourth position in the ranking of cryptocurrency market capitalization. According to data from Coingecko, XRP rose 17.6% in 24 hours, reaching a price of $2.28 and a market capitalization of about $130.1 billion. This surge marks the highest point for XRP in seven years.
The progress of the lawsuit between Ripple and the SEC is the direct reason driving the rise of XRP. On December 1, former CFTC chairman Chris Giancarlo discussed the high-profile lawsuit filed by the US SEC against Ripple over XRP in an interview this week. Giancarlo believes that the SEC should reconsider its approach, especially given the 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."
In addition, driven by altcoins such as XLM (Stellar) and XRP, the market value of Grayscale's investment portfolio has increased by 85% over the past month. Specifically, the surge in the price of XLM is partly attributed to Grayscale's recent filing of a 10-K document for its Grayscale Stellar Lumens Trust, in which 34,875,230 XLM tokens (worth about $3,923) were added to the trust, driving the overall net increase in the trust's assets.
Data on US Ethereum ETFs also reflects the arrival of the altcoin season. On November 29, the US spot Ethereum ETF set a new single-day record for fund inflows. According to Farside's data, 9 spot Ethereum ETFs attracted a total of $332.9 million in inflows, surpassing the previous record of $295.5 million set on November 11, an increase of $37.4 million. Several cryptocurrency commentators pointed out that on November 29, the inflow of funds into Ethereum ETFs exceeded the inflow of funds into the spot Bitcoin (BTC) ETF on that day, which was $320 million.
Felix Hartmann, founder of Hartmann Capital, believes that this is a signal that Wall Street has "officially joined" the altcoin rotation.
Institutional participation, more altcoin ETFs are in the pipeline
Since the Bitcoin spot ETF craze began at the beginning of this year, the participation of Wall Street giants like BlackRock and Fidelity has marked the further penetration of Bitcoin into the mainstream market, and also means the integration of TradFi and Crypto. At the same time, the market has been widely discussing which token might be the next to attract investment from Wall Street giants, and PANews has previously written an article introducing how Solana was once seen as the most likely choice due to its market capitalization and potential.
Meanwhile, there are currently 3 ETF applications to hold the 4th largest cryptocurrency asset XRP. Bitwise, Canary, and 21Shares have all filed for spot XRP ETFs. In addition, the global investment management company WisdomTree, known for its wide range of ETFs, has filed an application in Delaware to establish an XRP ETF, indicating WisdomTree's growing interest in expanding its presence in the digital currency field. WisdomTree currently manages approximately $113 billion in assets globally.
Prior to this, the asset management company had launched the Wisdomtree Physical XRP (XRPW) on well-known European exchanges such as the Deutsche Boerse Xetra, the six major Swiss exchanges, and Euronext in Paris and Amsterdam. The company positioned XRPW as the most cost-effective European XRP investment product.
Surging demand for crypto ETPs: Dual drive from the US and European markets
ETP is a general term that includes various types, such as ETFs (exchange-traded funds), ETNs (exchange-traded notes), and ETCs (exchange-traded commodities). Although ETP is the general term for this type of product, the term ETP is sometimes also used to refer to debt securities exchange-traded products.
On November 22, CoinShares research chief James Butterfill pointed out that the total assets under management (AUM) of digital asset ETPs exceeded $150 billion for the first time. According to CoinShares' data, digital asset investment products listed in Germany, Sweden, and Switzerland collectively manage about $13.64 billion in assets. In contrast, the relevant products in the US manage about $88.78 billion in assets.
In the European market, the dominance of crypto ETPs is consolidated, and institutional participation is increasing. As of November 28, the European market had a total of 221 crypto ETPs, with AUM reaching $18.132 billion, with a net inflow of $549 million over the past 6 months. ETPs provide retail and institutional investors with a convenient, regulated, and low-cost way to invest in cryptocurrencies, and can help investors avoid some potential volatility risks compared to directly purchasing crypto assets.
Due to the UCITS (Undertakings for Collective Investment in Transferable Securities) regulations in Europe, there is currently a lack of true cryptocurrency ETFs in Europe. The UCITS rules have high diversification requirements for funds, limiting the issuance of single-asset ETFs. For example, the UCITS diversification requirement includes that no single asset can exceed 10% of the fund, and the underlying assets must be qualified financial instruments. In June 2023, the European Commission has tasked the European Securities and Markets Authority (ESMA) to investigate whether UCITS rules need to be updated and focus on crypto assets. However, the purpose of this move seems to be to determine whether more rules and investor protection are needed, rather than to expand the eligible product types.
Nevertheless, the scale and development potential of the European crypto ETP market cannot be ignored. Companies such as CoinShares, Bitwise, and 21Shares have already occupied important positions in this field, and in the future, with the gradual relaxation of regulations, the development potential of crypto ETFs in the European market is huge.
Institutional participation accelerates the transformation of the ETP market
As early as October 20, VanEck CEO Jan van Eck said that the company currently has 12 token-based products trading in the European market, and VanEck's crypto ETP scale in Europe has reached 2 billion euros, but a large part of it comes from retail investors, with low institutional investor participation, and wealth management companies have not made any allocations, they haven't even started yet. In addition, Jan van Eck also said that very few private banks have truly approved investing in Bitcoin or Ethereum, and there have been no other major initiatives in the crypto asset space.
However, the situation changed rapidly after the results of the US election. In November, crypto ETP issuers took many new actions. On November 12, crypto research firm Kaiko announced the acquisition of European crypto index provider Vinter, aiming to expand Kaiko's crypto data market and enhance 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 that it would invest in the renamed Bitwise Physical XRP ETP fund (formerly "European XRP ETP"). Ripple CEO Brad Garlinghouse said the decision to invest in the Bitwise fund (trading under the ticker GXRP) is highly consistent with the growing interest in crypto asset-related ETPs.
He said: "As the US crypto regulatory environment finally becomes clearer, this trend is expected to accelerate, further driving demand for crypto ETPs like the Bitwise Physical XRP ETP."
On November 28, Swiss wealth management firm 21Shares added four new ETPs to its European product lineup, including PYTH, ONDO, RNDR, and NEAR, covering the price oracle, asset tokenization, decentralized computing, and artificial intelligence fields. All four ETPs will trade on exchanges in cities like Amsterdam and Paris.
Overall, Altcoins such as XRP have recently received unprecedented attention, and the narrative of Altcoin ETFs may become the next growth driver, injecting new vitality into the crypto asset market. As the regulatory environment becomes increasingly clear, crypto ETPs, as a regulated and convenient investment tool, are expected to continue attracting more investors, driving the market to further maturity.
