Emerging cryptocurrency-based exchange-traded products (ETPs) may attract significant new investment if approved, according to banking giant JPMorgan.
More investors are betting on the approval of the first spot Solana (SOL) and spot XRP (XRP) exchange-traded funds (ETFs) with expectations of a more innovation-friendly regulatory regime in the US after President-elect Donald Trump’s inauguration on Jan. 20.
In a Jan. 13 report shared with Cointelegraph, JPMorgan projected that SOL and XRP ETPs may eclipse the performance of spot Ether (ETH) ETFs in their first six months of trading.
“When applying these so-called “adoption rates” to SOL and XRP, we see SOL attracting roughly $3 billion-$6 billion of net assets and XRP gathering $4 billion-$8 billion in net new assets,” the report stated.
SOL and XRP ETPs could attract $3–8 billion. Source: JP MorganThe prediction comes shortly after the first anniversary of the US spot Bitcoin (BTC) ETFs, which nearly surpassed $110 billion in cumulative holdings on Jan. 2, Cointelegraph reported.
New crypto-based ETFs could propel the underlying altcoins to new all-time highs. For Bitcoin, the ETFs accounted for about 75% of new investment when Bitcoin recaptured the $50,000 mark on Feb. 15, less than a month after spot BTC ETFs debuted on Jan. 11.
Altcoin ETP adoption unknown due to uncertain investor demand
While the prospect of a SOL or XRP-based ETF has generated significant investor interest, these predictions are based on the adoption rate of Bitcoin and Ether ETFs.
Bitcoin ETFs have a 6% adoption rate, as the ETFs have attracted about 6% of Bitcoin’s total market capitalization. Ether ETFs saw a 3% adoption rate during their first six months.
Still, altcoin demand is less stable among investors, which makes predicting the performance of the next crypto-based ETF difficult, according to JPMorgan’s report:
“Outside of a few primary tokens (BTC, ETH, SOL), the episodic nature of the crypto market is driven by varying investor sentiment and trendy new coins that may capture incremental attention for a limited time.”
“We don’t see tokens with such limited depth successfully hosting an ETP,” the report added.
SOL ETFs near SEC deadline at the end of January
Several major asset managers have submitted applications for a Solana ETF, including VanEck, Grayscale, 21Shares, Bitwise and Canary Capital.
The US Securities and Exchange Commission is expected to make preliminary decisions on these applications before the end of January. Grayscale’s application faces a deadline on Jan. 23, with other applicants expecting decisions by Jan. 25.
Alejo Pinto, founder of Solana layer-2 network Lumio, said an ETF approval could significantly impact Solana’s price.
“Since it is still very uncertain, an ETF approval in the US would have a positive price impact on Solana since the probability is low and therefore not yet priced in,” he said.
