Investment banking giant JPMorgan anticipates that emerging cryptocurrency-based exchange-traded products (ETPs), such as those focused on Solana (SOL) and XRP, have the potential to attract substantial new investment, pending approval. With a more innovation-friendly regulatory environment expected in the US following President-elect Donald Trump’s inauguration on January 20, investors are increasingly optimistic about the approval of the first spot Solana and spot XRP ETFs.
A report from JPMorgan forecasts that these ETPs could outperform spot Ether (ETH) ETFs within their initial six months of trading. The report estimates that Solana could attract between $3 billion and $6 billion in net assets, while XRP might garner between $4 billion and $8 billion. This projection aligns with the performance trajectory of US spot Bitcoin (BTC) ETFs, which approached $110 billion in cumulative holdings by January 2.
The introduction of new crypto-based ETFs could potentially drive the underlying altcoins to unprecedented highs. After the debut of spot BTC ETFs on January 11, Bitcoin ETFs accounted for about 75% of the new investment when Bitcoin achieved the $50,000 mark by February 15. However, the adoption rate for altcoins remains uncertain due to fluctuating investor demand. While Bitcoin ETFs have demonstrated a 6% adoption rate relative to Bitcoin’s total market cap, and Ether ETFs a 3% rate during their early months, the unpredictable nature of altcoin demand among investors adds a layer of complexity to performance predictions for upcoming crypto-based ETFs.
JPMorgan’s report notes that outside of primary tokens like BTC, ETH, and SOL, the crypto market’s episodic nature, driven by varying investor sentiment and new trendy coins, makes it challenging for tokens with limited depth to successfully host an ETP.
Several significant asset managers, including VanEck, Grayscale, 21Shares, Bitwise, and Canary Capital, have submitted applications for a Solana ETF. The US Securities and Exchange Commission is expected to provide preliminary decisions on these applications by late January 2025, with Grayscale facing a deadline on January 23 and other applicants by January 25. Alejo Pinto, founder of Solana layer-2 network Lumio, highlighted that an ETF approval in the US could have a significant price impact on Solana, given the low current probability and absence from prevailing market pricing.