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Altcoin ETF season: which crypto fund is next?

altcoin-etf-season-which-crypto-fund-is-next
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Altcoin ETF season: which crypto fund is next?

The spot Ethereum ETF approval has given the crypto community hope for the launch of other altcoin-based funds.

Last week, the U.S. Securities and Exchange Commission (SEC) approved applications for the opening of spot Ethereum ETFs. The cryptocurrency community sees this move as an opportunity to launch funds with other leading altcoins, including the Solana ETFs.

How a spot ETF works

A spot ETF is a tool through which stock exchange participants can invest in digital cryptocurrency without purchasing and storing it in physical form. This procedure is based on tracking the actual market price of the asset.

After purchasing shares of a spot ETF, the investor receives a stake in the fund. The fund represents a certain volume of cryptocurrencies in their real form. Fund specialists manage the portfolio.

With a spot in the Bitcoin ETF, investors easily gain exposure to the cryptocurrency. They do not need to purchase, hold, or manage their portfolios independently, which could provide impetus for increased investment in the cryptocurrency market.

Acceptance of Crypto ETFs in the U.S.

At the end of 2021, the SEC allowed the launch of futures Bitcoin ETFs for the first time. Then, in January 2024, the SEC approved the first 11 spot Bitcoin ETFs. Grayscale‘s lawsuit against the SEC was vital in changing the regulator’s position.

The victory in the case and the subsequent recognition of the legality of spot ETFs made it possible to reduce the distance between digital and traditional assets. Grayscale, which previously operated the Bitcoin Trust with certain restrictions, now has the opportunity to transform into a full-fledged ETF.

Altcoin ETFs

The SEC approved Forms 19b-4 for eight Ethereum-based exchange-traded funds (Grayscale, Bitwise, BlackRock, VanEck, ARK 21Shares, Invesco, Fidelity, and Franklin) in a single decision, thus marking the beginning of altcoin-based ETFs.

Following the approval of the Ethereum ETF, the crypto community is wondering whether funds based on other popular altcoins will see the green light.

Solana ETF

Solana (SOL), a rising star in the blockchain arena, could also be a candidate for its spot ETF. The creation of the Solana ETF is still subject to regulatory approval. To do this, the fund issuer must demonstrate that the funds comply with all legal and regulatory standards, including investor protection and market integrity.

While the exact timing of approval remains unclear, experts believe Solana could soon enter the cryptocurrency spot ETF market.

What industry participants are saying

The CEO of the investment company BKCM, Brian Kelly, said that after the legalization of spot Ethereum ETFs, Solana ETFs will enter the American stock market. This altcoin will become the main competitor to ETH.

Bloomberg ETF analyst James Seyffart also noted that after Bitcoin and Ethereum ETFs, exchange-traded fund providers will likely turn their attention to Solana.

According to Seyffart, it will be a couple of years before the crypto derivatives market is fully supervised by the U.S. Commodity Futures Trading Commission (CFTC). The expert emphasized that the approval of the bill “On Financial Innovation and Technologies for the 21st Century” (FIT21) can speed up this process.

Bitwise Investment CEO Hunter Horsley claimed that by the end of 2024, the cryptocurrency community will be surprised at how many financial concerns will invest their capital in Bitcoin spot ETFs.

The head of Bitwise is convinced that distributing a new class of digital assets will make the crypto market even more attractive to investors.

Tristan Frizza, founder of Zeta Markets, commented to crypto.news that many consider BTC, ETH, and SOL to be the three significant cryptocurrencies of this market cycle. Therefore, with the approval of the ETH ETF, SOL will likely be the next ETF candidate.

“While Bitcoin has been touted as ‘digital gold’ and Ethereum has institutional focus, Solana is the network embraced by retail users with consistently among the highest activity metrics. The recent booms of protocol launches and token TGEs on Solana have also brought a lot of attention, users, and capital inflow to the network, and the anticipation of further growth will make it seem more than likely to place Solana as a lead asset to be considered for the ETF.”

Tristan Frizza, Zeta Markets founder

While nothing is clear yet, the impact of such ETF approval will likely attract subsequent attention, capital, developer, and user activity, which will further spin up Solana’s existing flywheel, and that’s what many of the network’s backers are likely counting on, Frizza concluded.

crypto.news also requested comment from the Solana Foundation team regarding the likelihood of the Solana ETF being approved.

Conclusion: will the crypto industry see Solana ETFs?

The SEC’s approval of Bitcoin spot ETFs has sparked interest in the potential of Solana-based ETFs, which could make investing in the SOL token more accessible to everyone.

Approving an altcoin ETF would be a significant milestone, potentially similar to approving the spot Bitcoin and Ethereum ETFs. It would promise to attract more institutional players to the cryptocurrency market.