Solana, Dogecoin…: These Crypto ETFs Promise Grand Things, But The Reality Might Disappoint!

The offices of the United States Securities and Exchange Commission (SEC) are overwhelmed with crypto ETF applications. Despite leaders being more inclined to speed up approvals, analysts remain cautious. If these products arrive, it does not necessarily mean massive adoption. According to some experts, demand could be much less explosive than expected, particularly for altcoins.

Crypto ETFs: low adoption expected

Crypto ETF applications for altcoins are pouring in, with assets like Solana, XRP, or Litecoin about to pass under the radar of American regulators. But beware, even if these ETFs come to life, investor enthusiasm may be more limited than one might imagine. Why? Because the most savvy investors, those who know the altcoin market well, already hold these assets on crypto exchanges or directly on the blockchain.

Analyst Katalin Tischhauser from Sygnum warns: “No one can really point out where substantial demand will come from“, referring to incoming flows of barely a few hundred million to a billion dollars.

A figure quite modest compared to the over 100 billion dollars that the Bitcoin ETF market currently weighs.

In other words, altcoin ETFs may face a invisible barrier: the majority of crypto investors are already positioned elsewhere.

In contrast, the Bitcoin ETF has seen significantly stronger adoption, particularly due to institutional investors in search of the famous regulation. However, for altcoins, nothing is guaranteed yet. Instead, wealth managers and institutional investors seem to be turning towards crypto indices that include both Bitcoin and Ethereum.

It remains to be seen whether altcoins will manage to capture some of this attention.

Adoption of Altcoin ETFs: a slow process

Behind the optimism of asset managers who foresee a bright future for altcoin ETFs lies a very different reality. Demand is unlikely to be as strong as that for Bitcoin ETFs.

Katalin Tischhauser reminds us that investors interested in cryptos like Solana or Dogecoin are already well established, either through centralized crypto exchanges or directly on the blockchain.

“If someone wants Solana, they’ve already bought it“, comments Bryan Armour from Morningstar.

Indeed, ETFs offer advantages, particularly in terms of institutional listing and custody, but these advantages will not be enough to transform investors en masse. The ETF structure allows for simplifying access to crypto-assets in an overall portfolio, and could well attract some wealth managers looking to diversify their offerings.

But the real question remains: is there genuine demand for these products? After taking their positions in Bitcoin and Ethereum, are institutional investors ready to bet on still uncertain altcoins?

Key figures to remember:

• Estimated global inflow for altcoins: 100 million to 1 billion dollars;
• Potentially included assets in ETFs: Solana, XRP, Litecoin, Dogecoin;
• Assets in Bitcoin ETFs: 100 billion dollars in funds.

Will this be enough to spark a new wave of adoption, or will altcoins remain the great forgotten ones of crypto ETFs? The question remains open.

In conclusion, crypto ETFs, even if they exist, do not guarantee spectacular success. Indeed, in recent weeks, Bitcoin ETFs have experienced a significant drop, linked to geopolitical tensions between the United States and China, illustrating that even regulated products are subject to market fluctuations.