Author: Weilin, PANews
The long-dormant altcoin market has finally revived.
On December 2, the price of the veteran altcoin XRP reached its highest point in seven years, surpassing Solana in market capitalization and becoming a new focal point of attention in the crypto market. Meanwhile, as the regulatory environment in the United States is expected to become clearer, the demand for crypto ETPs (exchange-traded products) has surged, with more institutions entering the space to apply for altcoin ETFs, such as Bitwise, Canary, 21Shares, and WisdomTree. In Europe, although the asset management scale is far less than that of the US, the regulatory framework has solidified the status of crypto ETPs as investment tools, with more institutions participating, including Bitwise, 21Shares, and crypto research firm Kaiko.
Altcoin Market Revival: XRP Surpasses Solana in Market Capitalization
On December 2, XRP's market capitalization broke through that of Solana (SOL), jumping to fourth place in the cryptocurrency market capitalization rankings. According to Coingecko, XRP rose by 17.6% within 24 hours, reaching a price of $2.28 and a market cap of approximately $130.1 billion. This surge marks XRP's highest point in seven years.
The progress of the lawsuit between Ripple and the SEC is the direct reason driving XRP's rise. On December 1, former CFTC Chairman Chris Giancarlo discussed the highly publicized SEC lawsuit against Ripple regarding XRP in an interview. Giancarlo believes that the SEC should reconsider its approach, especially in light of recent legal outcomes and the potentially changing regulatory environment. When asked if the SEC would drop the lawsuit against Ripple, Giancarlo stated: "I think they should… I bet they will."
Additionally, driven by altcoins like XLM (Stellar) and XRP, the market capitalization of Grayscale's portfolio has increased by 85% over the past month. The surge in XLM's price is partly attributed to Grayscale's recent submission of a 10-K filing for its Grayscale Stellar Lumens Trust, which added 34,875,230 XLM tokens (totaling approximately $3,923) to the trust, boosting the net increase in the trust's overall assets.
Data from the US Ethereum ETF also reflects the arrival of altcoin season. On November 29, the US spot Ethereum ETF set a new record for single-day fund inflows. According to Farside, nine spot Ethereum ETFs attracted a total of $332.9 million in fund inflows, surpassing the previous record of $295.5 million set on November 11, an increase of $37.4 million. Several cryptocurrency commentators noted that on November 29, the fund inflow for the Ethereum ETF exceeded that of the spot Bitcoin (BTC) ETF on the same day, which was $320 million.
Felix Hartmann, founder of Hartmann Capital, believes this is a signal that Wall Street is "officially joining" the altcoin rotation.
Institutions Entering the Market, More Altcoin ETFs Being Applied For
Since the beginning of this year, the surge in Bitcoin spot ETF interest has marked further penetration of Bitcoin into the mainstream market, with participation from Wall Street giants like BlackRock and Fidelity, indicating a fusion of TradFi and Crypto. Meanwhile, there has been widespread discussion in the market about the next token that might attract investment from Wall Street giants. PANews previously reported that Solana was once considered one of the most likely candidates due to its market capitalization and potential.
Currently, there are also three ETF applications for the fourth-largest crypto asset, XRP. Bitwise, Canary, and 21Shares have all submitted applications for a spot XRP ETF. Additionally, global investment management company WisdomTree, known for its extensive range of ETFs, has submitted an application in Delaware to establish an XRP ETF, marking WisdomTree's growing interest in expanding its presence in the digital currency space. WisdomTree currently manages approximately $113 billion in assets globally.
Prior to this, the asset management company launched Wisdomtree Physical XRP (XRPW) on well-known European exchanges, including Deutsche Börse Xetra, SIX Swiss Exchange, and Euronext in Paris and Amsterdam. The company positions XRPW as the most cost-effective European XRP investment product.
Surge in Demand for Crypto ETPs: Dual Push from US and European Markets
ETP is a generic term that includes various types, such as ETFs (exchange-traded funds), ETNs (exchange-traded notes), and ETCs (exchange-traded commodities). Although ETP is a general term for such products, it is sometimes used to refer specifically to debt securities traded on exchanges.
James Butterfill, head of research at CoinShares, pointed out on November 22 that the total assets under management (AUM) of digital asset ETPs have surpassed $150 billion for the first time. According to CoinShares, digital asset investment products listed in Germany, Sweden, and Switzerland manage approximately $13.64 billion in assets. In contrast, related products in the US manage about $88.78 billion in assets.
In the European market, the dominance of crypto ETPs is solid, with increasing institutional participation. As of November 28, there were a total of 221 cryptocurrency ETPs in the European market, managing assets of $18.132 billion, with a net inflow of $549 million over the past six months. ETPs provide retail and institutional investors with a convenient, regulated, and low-cost way to invest in cryptocurrencies, helping investors avoid some potential volatility risks compared to directly purchasing crypto assets.
Due to the restrictions of the UCITS (Undertakings for Collective Investment in Transferable Securities) regulations in Europe, there is currently a lack of true cryptocurrency ETFs. The UCITS rules impose high diversification requirements on funds, limiting the issuance of single-asset ETFs. For example, UCITS diversification requirements include 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 tasked the European Securities and Markets Authority (ESMA) to investigate whether the UCITS rules need to be updated and to focus on crypto assets. However, the aim of this move seems to be to determine whether more rules and investor protections are needed, rather than expanding the types of qualified products.
Even so, the scale and development potential of the European crypto ETP market cannot be ignored. Companies like CoinShares, Bitwise, and 21Shares have already established significant positions in this field, and as regulations gradually loosen, the potential for the development of crypto ETFs in the European market is enormous.
Institutional Participation Accelerates the Transformation of the ETP Market
As early as October 20, Jan van Eck, CEO of asset management company VanEck, stated that the company currently has 12 token-based products trading in the European market, with VanEck's crypto ETP scale in Europe reaching €2 billion, but a large portion of this comes from individual investors, with low participation from institutional investors. Wealth management companies have not allocated to these products, and they have not even begun to take action. Additionally, Jan van Eck mentioned that very few private banks have truly approved investments in Bitcoin or Ethereum, nor have there been any significant moves regarding other crypto assets.
However, the situation changed rapidly following the results of the US elections. In November, institutional issuers of crypto ETPs made many new moves. On November 12, crypto research firm Kaiko announced the acquisition of European cryptocurrency index provider Vinter, aimed at expanding Kaiko's cryptocurrency data market and enhancing services for asset managers and institutional clients. Kaiko and Vinter will jointly offer regulated products, such as derivatives, ETFs, and ETPs.
On November 27, Ripple announced it would invest in the renamed Bitwise Physical XRP ETP fund (formerly known as the "European XRP ETP"). Ripple CEO Brad Garlinghouse stated that the decision to invest in the Bitwise fund (trading code: GXRP) is highly consistent with the growing interest in ETPs related to crypto assets.
He stated: "As the US cryptocurrency regulatory environment finally becomes clearer, this trend is expected to accelerate, further driving demand for crypto ETPs, such as the Bitwise Physical XRP ETP."
On November 28, Swiss wealth management company 21Shares added four ETPs to its European products, namely PYTH, ONDO, RNDR, and NEAR, covering areas such as price oracles, asset tokenization, decentralized computing, and artificial intelligence. All four ETPs will be traded on exchanges in cities like Amsterdam and Paris.
Overall, recent attention on altcoins like XRP has reached unprecedented levels, and the narrative of altcoin ETFs may become the next growth driver, injecting new vitality into crypto assets. As the regulatory environment gradually clarifies, crypto ETPs, as a regulated and convenient investment tool, are expected to continue attracting more investors, further maturing the market.
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