The cryptocurrency market is heating up, altcoins are迎来新机遇

Recently, the Crypto Assets market has shown new trends. Although the price of Bitcoin has retreated, Ethereum has reversed its downward trend and broken through the $3600 mark. Meanwhile, multiple sectors such as Defi and Layer2 have generally risen, and the alts market seems to be rejuvenating. This stands in stark contrast to the market situation a few days ago, when Bitcoin was close to the $100,000 high, while the alts market was generally sluggish.

In this market environment, Wall Street's attention has begun to turn towards altcoin ETFs. Against the backdrop of an improving regulatory environment, this move injects new vitality into the long-dormant altcoin market.

Reflecting on the situation from a week ago, the news of Bitcoin breaking through $99,000 sparked widespread attention, but the crypto community unusually remained silent. In this institution-led bull market, most market participants have not benefited from it. On the contrary, the alts they hold are continuously being drained by Bitcoin, showing a persistent downward trend, in stark contrast to the vigorous bull market promotion.

As a recognized mainstream coin, Ethereum's relative increase is far less than that of Bitcoin. The exchange rate between ETH and BTC has continuously decreased throughout the year, dropping from 0.053 all the way down to a low of 0.032, only recently starting to rebound. The performance of other alts has been even less satisfactory.

However, the altcoin market seems to be starting to recover recently. Coins such as SOL, XRP, LTC, and Link have taken the lead. Solana's decentralized exchange has seen an average daily trading volume exceeding $6 billion, and XRP once surged to $1.63. Ethereum has even strongly broken through $3,600, driving the entire altcoin sector to rise collectively, with the Defi sector experiencing a 24-hour increase of as much as 8.47%.

Analyzing the reasons for the rise of alts, aside from the positive sentiment brought by the bull market, the influence of Wall Street cannot be ignored. The launch of ETFs is the most direct manifestation of this trend.

Tracing back to the starting point of this bull market, the launch of 11 Bitcoin spot ETFs ignited a market frenzy. The entry of Wall Street giants has accelerated the mainstream adoption of Bitcoin, while significantly lowering the barriers to market participation. With Bitcoin and Ethereum spot ETFs being approved in succession, the market has begun to focus on the next token that could attract Wall Street. Based on market capitalization and capital considerations, Solana was once the most highly regarded candidate.

On June 27, asset management giants took the lead in submitting relevant ETF application documents to regulators, followed by other institutions. This series of actions brought the hype around the SOL ETF to a climax. However, the regulators' tough stance quickly cooled the enthusiasm for alts ETFs.

But now, the market environment has changed significantly. On November 22, exchange documents showed that four Solana-related ETFs are seeking to be listed and traded on the platform. These ETFs are initiated by different institutions, and if officially accepted, the final approval deadline is expected to be in early August 2025.

Not only Solana, but more altcoin ETFs are also in preparation. In the past month, several investment firms have submitted spot ETF applications for assets such as XRP, Litecoin, and HBAR to regulatory agencies. According to industry insiders, at least one issuer is currently attempting an ETF application for ADA or AVAX.

The emergence of these altcoin ETFs has sparked widespread discussion, and the expectation of future capital inflows has further heated the market. However, from an objective perspective, the approval of Crypto Assets for spot ETFs typically requires meeting two implicit criteria: first, they must not be explicitly classified as securities; second, there must be leading indicators proving market stability and non-manipulability, such as the launch of a futures market on mainstream commodity exchanges. Currently, apart from Bitcoin and Ethereum, it seems that no other Crypto Assets fully meet these standards.

Nevertheless, the market remains optimistic about the approval of ETFs for coins such as SOL and XRP. Some ETF analysts believe that the decision-making approval time for the relevant ETFs may be extended to the end of 2025, but it is expected that Solana-related ETFs will likely be approved within two years.

This optimism is backed by substantial support, with the core factor pointing to the new government that is about to take office. The new government's commitment to Crypto Assets is gradually being fulfilled, and changes in the regulatory environment have given the Crypto Assets industry greater confidence.

From the perspective of internal industry regulation, major regulatory agencies are about to undergo personnel changes. The current head of the regulatory agency announced that they would resign on the day the new government officially takes office, which has put a pause on the strict regulations of recent years. During their tenure, this head took law enforcement actions against multiple crypto-related entities, completing thousands of cases and recovering approximately $21 billion in fines, and is regarded as a well-known opponent of encryption in the industry.

Although the next head of the regulatory agency has not yet been determined, there are reports that a former commissioner may take over. Against the backdrop of intensified disputes over digital asset regulatory authority, there are also rumors that the new government hopes to expand the powers of the Commodity Futures Trading Commission to strengthen its oversight in the digital asset space. If this move is realized, the likelihood of crypto assets being classified as securities may decrease.

From a broader external perspective, the new government can be said to be a hub for Crypto Assets supporters. Among the cabinet members of the new government, in addition to some well-known figures, several members are supporters of encryption, with some even holding Crypto Assets themselves. For instance, a certain nominee not only holds a large amount of Bitcoin but also has provided custodial services for a stablecoin for several years.

It is obvious that the composition of the new government is very different from before. As most of the higher-ups are supporters, the regulation of Crypto Assets will inevitably become more lenient. If a complete Crypto Assets regulatory framework can be established during this government's term, the future regulatory direction of the industry will also be clearer.

In addition to regulatory aspects, enterprises under the new government have also been targeting business opportunities, and have been taking frequent actions recently, aiming to expand the landscape of the Crypto Assets industry through investment and financing. There are reports that a certain media technology company is in discussions with an exchange, planning to acquire a Crypto Assets exchange. At the same time, the company has also submitted an application for Crypto Assets payment services, planning to enter the crypto payment field. These corporate movements indirectly reflect the high-level positive attitude towards Crypto Assets.

It is precisely based on these factors that the market has rekindled hope for altcoin ETFs. With the change in leadership at regulatory agencies, the securities controversy surrounding altcoins is expected to ease, laying a preliminary foundation for the realization of ETFs.

On the other hand, even if the prospects for altcoin ETFs are difficult to predict, Wall Street is unwilling to give up on this massive market worth over $30 trillion. Traditional financial institutions are building new investment products and derivative tools around Crypto Assets to facilitate investors in incorporating Crypto Assets into their portfolios.

The head of a certain crypto index provider stated that mainstream investors will establish direct exposure through spot Bitcoin ETFs, while also customizing their exposure to the asset class via additional products. Among these, the most popular products include commodity futures that are linked to crypto assets and generate returns, as well as products that provide downside protection through options. The company is currently planning to launch Bitcoin index options.

The chief investment officer of an investment advisory firm also mentioned that they are considering increasing exposure to Bitcoin in their ETF model portfolio.

Overall, although the current craze for altcoin ETFs faces challenges under the existing regulatory environment, in the long term, as regulations loosen and investor interest increases, financial institutions will inevitably deepen their research into Crypto Assets in consideration of traffic acquisition and market competition. On the product side, institutions will no longer be limited to Bitcoin and Ethereum, the productization and standardization of Crypto Assets will be further strengthened, and the derivatives market may experience an explosion, aiming to clear obstacles for investors to enter. It is foreseeable that in the future, investors will have more ways to invest in cryptocurrency-related products.

In addition to new products that have not yet been launched, existing ETFs will also benefit from this trend. Taking the Ethereum spot ETF as an example, its capital inflow has long been weaker than that of Bitcoin. As of November 27, the net inflow of funds into the Ethereum spot ETF was approximately $240 million, while the net inflow for the Bitcoin spot ETF reached as high as $30.384 billion, highlighting a significant disparity between the two.

There are multiple reasons for this gap. Ethereum has disadvantages in value stability and positioning compared to Bitcoin, and its core staking feature being rejected by regulators has further weakened investor enthusiasm. From a cost perspective, directly holding ETH can yield about 3.5% staking rewards, while holding institutional ETFs not only cannot obtain this risk-free return but also incurs management fees ranging from 0.15% to 2.5%.

However, with the changes in the regulatory environment, Ethereum spot ETFs may no longer be unrelated to staking functions in the future. After all, the previously firm opposition of regulatory agencies to staking has changed, and there are precedents in the European market for launching products with staking functions. Recently, a European ETP issuer announced the addition of staking functionality to its Ethereum core ETP product.

Of course, although ETFs have broad prospects, actual fund inflows remain to be seen. Even the attraction of Ethereum to traditional capital is relatively limited, with the total assets of a certain institution's Solana Trust being only $70 million, indicating that the investment purchasing power for alts may not be as optimistic as expected. As a result, the head of the digital asset department of a large asset management institution has stated that the company has little interest in crypto products other than Bitcoin and Ethereum.

Regardless of how the subsequent approvals progress, the heated discussions around the altcoin ETF have already begun, which is undoubtedly a shot in the arm for the long-dormant altcoin market. The development of this trend will have a profound impact on the entire Crypto Assets ecosystem, and it is worth continuous attention from market participants.