Is the narrative of altcoin ETFs no longer effective?

The altcoin ETF is no longer popular.

Compared with the excitement in the market during the approval process of Bitcoin and Ethereum spot ETFs, the market sentiment brought by altcoin ETFs can only be described as negligible. But five months ago, the market was still immersed in the bright prospects of the policy bull market. Wall Street institutions with a keen sense of smell came to the altcoin market, pushing altcoins to set off a round of price increases. XRP and SOL were the first to bear the brunt and became the new concept coins of Wall Street under favorable supervision.

But now, the tide of altcoin ETFs has receded, approval news has been heard frequently, and capital institutions have also flocked in, but market attention has gradually decreased.

As for the reasons, the current altcoin ETFs can only blame the fact that they were not born in a good time.

Since Trump announced the strategic reserve of cryptocurrencies, although it did not cause a significant price fluctuation, capital institutions have set their sights on the new market - altcoins. Looking at the altcoin ETFs today, the team is gradually growing. On March 6, a new ETF application was submitted again. In addition to Canary submitting the S-1 application for the AXL ETF, Bitwise also applied for the APT ETF, and VanEck also confirmed that it will launch the Avalanche ETF. So far, more than 7 institutions have applied for ETFs involving 11 major currencies, covering SOL, DOGE, LTC, SUI, XRP, APT, MOVE, HBAR, BONK, TRUMP, and ADA.

In terms of the applicant institutions, SOL, which is known as the "killer" of Ethereum, and XRP, which has abundant local resources, are the currencies with the most applicant institutions. Both have gathered 6 issuers, reflecting the continued optimism of institutions for these two currencies. Among them, Franklin Templeton, Grayscale, Bitwise, VanEck, 21Shares and Canary Capital have applied for SOL ETF, and Franklin Templeton, Grayscale, Bitwise, Canary Capital, 21Shares and Wisdomtree have applied for XRP ETF. In addition to the above currencies, LTC and DOGE have two issuers respectively, while other currencies are mostly applied by a single institution.

In fact, from the perspective of altcoin ETFs alone, the selected currencies have become increasingly extensive, and even quite a riot of demons. In addition to the relatively large-scale SOL, XRP, LTC, ADA, and DOGE, public chain coins are emerging in an endless stream, and even the long-dormant DOT has been selected by 21Shares. In the context of MEME rampant, BONK and TRUMP, which are regarded as strong market makers, also appeared in the ETF application form of Rex Shares.

Although there are many currencies, the more high-profile currencies have greater problems in terms of the probability of approval. The previous soft requirement of having futures contracts on CME seems to have been untied with the relaxation of supervision, but the securities attributes and the lawsuits cannot be resolved in one day. After the approval of Ethereum ETF, SOL is the most popular currency among altcoins, and the application time is relatively early. According to records, VanEck and 21Shares submitted 19b-4 documents as early as June last year, but due to SOL’s own securities attributes, the approval has never been achieved. In August last year, VanEck and 21Shares’ 19b-4 documents were removed from COBE, and in December last year, with the last bit of pride, former SEC Chairman Gary Gensler notified at least two SOL spot ETF applicants that the 19b-4 documents were rejected. Up to now, the SEC has only announced that it has accepted all SOL ETF spot applications submitted by issuers.

XRP and SOL are basically the same. Ripple's lawsuit is like a foot wrap. After more than four years, it has not been put down. As a result, Ripple's CEO continues to donate political donations to Trump and Congress, hoping to obtain exemptions from the lawsuit and continue to expand XRP's influence. Simple and crude donations have indeed brought benefits to XRP. Although it is in the SEC acceptance and approval stage with SOL, Ripple's business in the US market has grown significantly. According to its CEO, Ripple signed more US transactions in the last six weeks of 2024 than the total of the previous six months, and has concentrated 75% of new jobs in the United States.

As for other altcoins, the probability of approval is slightly limited at the moment when the leading ones have not yet been approved, but there are two exceptions, one is LTC and the other is DOGE. Both have no historical burden of securities, and the other is that they are both commodities. There is no negative impact from the regulatory perspective, and the obstacles are relatively small. Especially LTC, which is a public chain using POW, consistent with the mechanism of BTC. Although its scale is only US$7.7 billion, it is also quite deep in the market. DOGE is the leader among MEMEs and has become a cultural symbol. With the support of Musk, the probability of approval naturally increases. Precisely because of the above reasons, Eric Balchunas, senior ETF analyst at Bloomberg, has previously predicted that the Litecoin ETF has the highest probability of listing before the end of this year, reaching 90%, higher than Dogecoin (75%), Solana (70%) and XRP products (65%).

Judging from the approval progress, most ETFs are in the stage of being accepted but not approved. In the entire approval process, the issuer will first submit the S-1/S-3 form to the SEC, and then the ETF dealer determined by the issuer will submit the 19b-4 form. According to the rules, the SEC usually publishes the 19b-4 document in the Federal Register after accepting it, and opens a 21-day public comment period. During this period, the SEC can postpone, negotiate and review multiple times, but the time period shall not exceed 240 days.

From the most recent approval point of view, on March 12, the US SEC documents showed that the US Securities and Exchange Commission postponed the approval of multiple spot cryptocurrency ETF applications, including Grayscale Spot Cardano ETF, Canary Spot XRP ETF, Canary Spot Solana ETF, Canary Spot Litecoin ETF and VanEck Spot Solana ETF. Of course, judging from the altcoin ETF alone, the SEC's postponement of the ETF is foreseeable. The core reason is that after the previous generation of iron-blooded supervision, Trump's nominee for the new SEC Chairman Paul Atkins has not yet been confirmed by Congress. The leader is not there yet, and the regulations cannot be implemented. It can only be suspended through postponement. From the usual point of view, the leadership team takes more than 2 months from nomination to taking office. The market expects that the new chairman will make his debut in March.

Although the approval process has been full of ups and downs, from the perspective of existing supervision, the probability of approval is undoubtedly continuing to increase. Even SOL and XRP, which are still under litigation, have been included in the US digital asset strategic reserve. Although this has no direct connection with approval or not, it can also indirectly reflect that the above-mentioned currencies are expected to be freed from the SEC's restrictions.

However, judging from market performance, the narrative of altcoin ETFs does not seem to be working.

Five months ago, in November last year, institutions launched a wave of applications for altcoin ETFs, and the first batch of coins such as SOL, XRP, LTC, and HBAR rose rapidly. In one month, XRP soared from $0.5 to $2.9, and successfully reached $3.4 on January 16 this year. SOL also followed a similar trajectory, rising from $160 to $264, and soared to $295 on January 19.

In November, due to the general rise of altcoins, the long-dry market was like a rain of blessings. The slogan "Altcoin season is coming" brought a glimmer of hope to the steadfast holders. But the dream was soon shattered. In February, all altcoins continued to fall, and the news of altcoin ETFs could no longer drive the market. Regardless of the progress of approval, the price of coins continued to move downward.

Has the ETF narrative become invalid? Actually, it may not be, otherwise there would not be so many holders keeping a close eye on ETF data. But the strange thing is that today's ETFs are not born at a good time. From the current financial market, the narrative of a single sector is no longer sustainable, and the world is betting on whether the United States will go into recession. The more Trump dances with the tariff stick and geopolitics, the greater the macro uncertainty, the greater the possibility of inflation, and the US recession theory is also uninvited. At this point, even the government cannot give a guarantee of recession. In addition to Trump's mysterious remarks that "I am not sure whether there will be a recession", the US Treasury Secretary also responded positively today that "there is no guarantee that the US economy will not fall into recession", which is a state of scraping the bone to heal the wound.

In this panic, Bitcoin has shown a downward trend, and continues to fluctuate around $80,000-83,000. ETH has started a defense battle at the $1,900 mark. SOL has fallen to $128, and the market is at the junction of bull and bear markets. In a market with insufficient liquidity, it is not easy to have an independent market trend. ETFs are still in the approval period and have not been substantially approved. The expectations they bring are not enough to change the trend, and can only serve as a forward factor to support the bottom of prices.

It is worth noting that even if the ETF is approved, the actual purchasing power is questionable. The total net inflow of Ethereum spot ETF is only $2.5 billion, which is enough to prove that the market propaganda that "billions of dollars will flow in after the altcoin is approved" is not credible. Even if it is credible, it is not built in a day. After all, in theory, the market value of the altcoins that have applied for ETFs is much smaller than that of Ethereum. The largest market value of XRP is $135.4 billion, while the market value of Ethereum 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 price of Bitcoin continues to fall, and there is also a reason for the reduction of spot ETFs. The latest data shows that the US spot Bitcoin ETF has reduced its 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, the holdings have decreased by 55,348.00 Bitcoins.

Of course, for altcoins, narrative is far more important than pricing power. Institutions can bring in real money, and holders can only look forward to being treated differently by institutions, and fall into a love-hate relationship with capital. For most currencies, ETFs are a step into Wall Street, and they are connected to Wall Street, and are one step closer to getting the "Made in the USA" label. Even the chance of being included in the reserve through operations will increase. At least during Trump's four-year term, they can live better than other altcoins.