The Rise of the Altcoin ETF Gold Rush

Preface

In January 2024, the spot Bitcoin ETF began trading on Wall Street. Six months later, the spot Ethereum ETF made its debut. Today, regulators are faced with 72 cryptocurrency ETF applications, and the number is still increasing.

From Solana to Dogecoin, XRP, and even PENGU, asset management firms are competing to package various digital assets into regulated products. Analysts have raised the approval probability for most applications to over 90%, suggesting that we are about to witness the largest expansion of crypto investment products in history.

The year 2024 is completely different from the current year 2025. From seeking recognition to competing for market share, the cryptocurrency industry has undergone earth-shattering changes.

The huge success of Bitcoin ETF

To understand the importance of alts ETF, one must first recognize that the success of spot Bitcoin ETFs has far exceeded expectations. They have redefined the rules of asset management.

In one year, Bitcoin ETF attracted $107 billion, becoming the most successful ETF issuance in history. After 18 months, the asset size reached $133 billion.

A large asset management company's Bitcoin ETF holds 694,400 Bitcoins worth over $74 billion. All ETFs combined control 1.23 million Bitcoins, accounting for approximately 6.2% of the total circulating supply.

This success proves that the demand for gaining exposure to crypto assets through traditional investment tools is real and substantial. Institutions, retail investors, nearly everyone is lining up to participate.

The necessity of ### ETF

Although altcoins can be purchased on cryptocurrency exchanges, ETFs still have unique value. ETFs bring mainstream recognition and legitimacy to cryptocurrencies.

ETFs allow investors to buy and sell digital assets through regular brokerage accounts just like trading stocks. This is an ideal option for retail investors who are not familiar with how cryptocurrencies work. There is no need to set up wallets, protect private keys, or deal with the technical details of blockchain. The custody and security of the ETFs are managed by professional institutions, providing high liquidity assets traded on major exchanges.

altcoin ETF申请热潮

Many institutions have submitted applications for the Solana ETF, with an approval rate as high as 90%. Nine independent issuing institutions also hope to participate in the competition for SOL.

The ETF applications for XRP, Cardano, Litecoin, and Avalanche are also under review. Even meme coins are not exempt, with ETF applications for Dogecoin and PENGU already submitted.

This trend is the result of multiple factors working together. Changes in the regulatory environment, institutional recognition of cryptocurrencies, the increase in corporate cryptocurrency reserves, and the shift in financial advisors' attitudes toward crypto asset allocation have all created a huge demand for diversified crypto exposure.

Economic reality

Although the Bitcoin ETF has proven the existence of significant institutional demand, the acceptance of altcoin ETFs may vary.

The total inflow of alts ETF is expected to reach "hundreds of millions to 1 billion dollars", far lower than Bitcoin's achievement of 107 billion dollars. The performance of the Ethereum ETF further highlights this gap, attracting only about 4 billion dollars in net inflows over 231 trading days.

Bitcoin benefits from first-mover advantage, regulatory clarity, and an easily understandable "digital gold" narrative. Now, 72 applications are chasing a market that may only support a few winners.

Staking: A Game Changer

One of the main differences between altcoin ETFs and Bitcoin ETFs lies in the ability to earn returns through staking. The regulatory approval for staking has opened the door for ETFs to stake their held assets and distribute returns to investors.

The staking of Ethereum and Solana has created new yield opportunities. This has generated new revenue models for ETF issuers and provided investors with new value propositions. Staking ETFs no longer just offer price exposure but have become income-generating assets.

However, ETF managers managing staked crypto assets face multiple challenges, including balancing liquidity demands, managing risks, and ensuring technical security.

fee competition

A large number of applications almost guarantees a compression of fees. When 72 products compete for limited institutional funds, pricing becomes the primary differentiating factor.

Some issuers may even use staking rewards to subsidize management fees, launching zero-fee or negative-fee products to attract assets. This fee compression benefits investors but also puts pressure on issuers' profitability.

Conclusion

The craze for altcoin ETFs is changing people's perceptions of crypto investment. Different cryptocurrencies are viewed as investment options with varying uses and risk characteristics.

However, this also shows the degree to which cryptocurrencies have deviated from their roots. When meme coins gain ETF applications, when numerous products compete for attention, and when fees are compressed, we are witnessing the complete mainstreaming of an industry.

The market will determine whether this transformation creates real value or simply wraps speculation in a shell recognized by regulators. Regardless, the landscape of cryptocurrency investment is undergoing profound changes.