Is the SEC delaying altcoin season? Analysts say no rally until ETFs launch
The crypto industry has been eagerly awaiting an altcoin season, but so far, the anticpated rally hasn’t materialized. This has raised questions about what’s holding the market back, and a recent Bitfinex report has highlighted a key factor.
- Analysts say a sustained altcoin rally depends on the launch of new exchange-traded funds.
- Dozens of altcoin ETF proposals, including SOL, XRP, HBAR, and LTC, are currently under SEC review.
- Industry optimism for approval remains high despite recent delays, with some ETFs seen as having approval odds of up to 95%.
Analysts have pointed to a new factor contributing to the delay in the long-awaited altcoin season. In their latest market report, Bitfinex analysts noted that altcoins are unlikely to see a sustained market rally until the launch of new spot exchange-traded funds.
While the sector is already seeing liquidity flows, the analysts noted that more significant capital rotations are not expected until much later in the current cycle. This is expected to be fueled by the launch of altcoin-based ETFs currently under regulatory review, which would generate fresh demand and sustained inflows.
This take has renewed the spotlight on the dozens of altcoin ETF proposals currently under regulatory review, many of which have experienced pushbacks and delays.
Altcoin season on hold as SEC stalls on ETFs
Proposals for ETFs tracking Solana (SOL), XRP (XRP), Hedera (HBAR), and Litecoin (LTC) are among the several altcoin-focused investment vehicles under consideration by the SEC.
The recent delays by the regulator have created uncertainty around the potential launch timeline. So far this month, nearly all proposed ETFs have been postponed, with the SEC citing the need for additional review. The agency has now set October as the deadline for decisions on most proposals.
With the potential start of an altcoin season likely hinging on the successful launch of these ETFs, the long-anticipated rally may take more time to materialize.
Will the SEC approve altcoin ETFs?
Industry optimism for the eventual greenlight of the altcoin ETFs under review is high. Experts have placed approval odds for some of the proposed funds, including SOL, XRP, and LTC, at around 95%.
Others, such as Cardano (ADA), Polkadot (DOT), Avalanche (AVAX), and Hedera (HBAR), are estimated at around 90%, while SUI (SUI) and Tron (TRX) carry more modest figures of 60% and 50%, respectively.
Adding weight to the bullish outlook is the SEC’s recent shift toward a more constructive approach. Under former Chair Gary Gensler, spot ETFs faced stricter scrutiny before Bitcoin (BTC) and Ethereum (ETH) ETFs were eventually launched in January 2024. The current leadership under Chair Paul Atkins has signaled a softer stance, providing a more positive outlook for the funds currently under review.
In addition, recent amendments by issuers to their various filings have been seen as signs of positive engagement with regulators, further improving the likelihood of approval.
Still, the ultimate verdict on the proposals rests with the regulatory watchdog, and it remains to be seen whether these funds will receive the greenlight needed to usher in the next altcoin season.
