Altcoin ETF demand may be limited despite expected SEC approval

Analysts predict limited investor interest in ETFs holding alternative cryptocurrencies like Solana (CRYPTO:SOL), XRP (CRYPTO:XRP), and Litecoin (CRYPTO:LTC), even if U.S. regulators approve them in 2025.

While asset managers have filed multiple applications, initial demand for altcoin ETFs is expected to be weaker than Bitcoin and Ether ETFs, primarily attracting retail investors.

Katalin Tischhauser, research head at Sygnum, estimates total inflows for altcoin ETFs to range between several hundred million and $1 billion, significantly lower than the $100 billion held by U.S. Bitcoin (CRYPTO:BTC) ETFs.

Morningstar’s Bryan Armour noted that many altcoin investors already hold assets on exchanges or on-chain, which could reduce ETF demand.

Despite this, asset managers remain optimistic, citing JPMorgan research projecting cumulative altcoin ETF demand exceeding $14 billion.

Federico Brokate, head of 21Shares’ U.S. operations, highlighted the potential appeal of institutional pricing and custody benefits for crypto-native investors.

Independent registered investment advisors (RIAs) are reportedly interested in altcoin ETFs as a way to differentiate their portfolios.

Bloomberg Intelligence estimates the likelihood of an XRP ETF approval at 65%, with even higher odds for Litecoin (90%) and Solana (70%).

The SEC is expected to make a decision on proposed altcoin ETFs by October.

If approved, these ETFs could mark a shift in institutional adoption of cryptocurrencies beyond Bitcoin.

On February 14, the SEC acknowledged Cboe’s request to list 21Shares’ XRP ETF, signaling potential regulatory openness.

A strong futures market often supports crypto ETF applications by providing a stable price benchmark.

On February 20, Franklin Templeton launched an ETF holding both spot Bitcoin and Ether (CRYPTO:ETH), following Hashdex’s Nasdaq Crypto Index US ETF release on February 14.