At the end of April, the U.S. Securities and Exchange Commission (SEC) welcomed its new leader—Paul Atkins. This new chairman, known as a 'crypto-friendly' figure, took on the most complex workload in the SEC's history in the cryptocurrency domain: over 70 applications for cryptocurrency exchange-traded funds (ETFs) awaiting decisions.
Just three days into his term, he postponed decisions on multiple altcoin ETF applications until June. While this was expected, it clearly showed the market that even with a warming attitude, the regulatory path for crypto assets remains fraught with challenges.
Interestingly, while various institutions are rushing to apply for new altcoin ETFs, the Ethereum ETF is undergoing a silent capital outflow crisis. This stark contrast raises a core question: If Ethereum is struggling in the ETF arena, can altcoin ETFs truly break through?
What drives the wave of ETF applications?
Currently, leading asset management firms, including Grayscale, Bitwise, and Canary Capital, have submitted ETF applications for more than a dozen crypto assets, including Solana, XRP, Dogecoin, Aptos, Hedera, and Sui. The breadth of the application list, from mature public chains to meme coins, nearly covers the entire mainstream altcoin market.
Why are these companies still rushing forward despite the Ethereum ETF's continual losses?
The answer is simple: accessibility and channel laying.
As Bloomberg ETF analyst Eric Balchunas describes, turning your token into an ETF is like listing a song on all streaming platforms; it does not guarantee everyone will listen, but at least it gives you a chance to be seen.
In the crypto world, traffic is life.
However, to accurately identify which assets have potential in such a complex environment, relying solely on intuitive understanding is far from sufficient. Through Mlion.ai's data dashboard and coin analysis tools, you can identify on-chain activity, capital flow, community sentiment, and other multidimensional data for different tokens with one click, thus scientifically discerning the truly promising 'next big star'.
The painful lesson of the Ethereum ETF
As of April 18, Ethereum-related ETFs have seen seven consecutive weeks of net capital outflow, totaling over $1.1 billion, with assets under management dropping to $5.24 billion, a historical low. In stark contrast, Bitcoin ETFs have recorded nearly $1 billion in net inflow daily, even during overall market volatility, helping BTC prices rise back to $95,000.
Why couldn't the Ethereum ETF replicate the success of Bitcoin?
There are mainly three reasons:
High fee structure
Grayscale's ETHE has an annual management fee of up to 2.5%, while newcomers like BlackRock have offered an ultra-low rate of 0.25%. Long-term holders will naturally vote with their feet, directing funds toward options with lower costs.Complex value narratives
Bitcoin is deeply ingrained as 'digital gold', while Ethereum's multiple roles as a smart contract platform, DeFi hub, and NFT cornerstone make it difficult for financial advisors to summarize when recommending to clients, significantly increasing marketing costs.Staking rewards have been stripped away
The SEC has prohibited Ethereum ETFs from incorporating staking mechanisms, stripping away a significant natural advantage of Ethereum, resulting in ETF holders not being able to enjoy the rewards generated by staking ETH, losing the competitive edge against spot holdings.
These three major pain points profoundly warn altcoin ETF issuers: If they simply replicate the Ethereum model, they may ultimately repeat the same mistakes.
If you wish to track ETF dynamics, regulatory changes, and capital inflows and outflows in real-time, Mlion.ai's news deep analysis and large transaction monitoring functions can provide you with the most timely data support, avoiding missing key nodes.
Why are altcoin ETFs still worth betting on?
Despite the lessons from the past, the wave of applications is still surging. The main reasons are three:
The policy window brought by the Atkins effect
Paul Atkins' appointment is widely seen as a move towards being crypto-friendly. His arrival has given the market unprecedented hope. According to analysts at Bloomberg, the approval probability for ETFs of mainstream assets like Solana, XRP, and Litecoin is between 75% and 90%. For issuing institutions, this is a once-in-a-lifetime golden window; if they do not position themselves now, they may lose the opportunity forever.Surge in institutional investment demand
According to a report released by Coinbase and EY-Parthenon, 83% of institutions plan to increase crypto allocations by 2025, aiming to expose over 5% of their assets under management to the crypto space. Institutions need diverse targets rather than being limited to just Bitcoin and Ethereum.Clear and differentiated asset narratives
Unlike Ethereum's complex narrative, Solana focuses on transaction speed and DeFi expansion, XRP specializes in cross-border payments, and Hedera emphasizes enterprise-level applications. Each altcoin has a unique and easily marketable story. This clear positioning makes it easier for altcoin ETFs to penetrate institutional portfolios.
Mlion.ai has also added narrative label analysis features for various mainstream altcoins on its platform, helping users quickly understand the storyline behind each asset, suitable for accurately screening potential projects amidst the chaos.
Potential impacts: Opportunities and risks coexist
If these ETFs are approved, the market will welcome a new wave of capital flows.
J.P. Morgan predicts that Solana ETFs alone could attract $3-6 billion in their first year, while XRP could attract $4-8 billion.
Imagine the influx of funds at this scale; it could redefine the entire altcoin landscape in a short time, even causing certain token prices to skyrocket and dramatically changing market dynamics in the short term.
However, risks also exist.
Capital being too dispersed across too many ETF products may lead to insufficient scale for individual funds, unable to reach the critical point of institutional portfolio allocation. At the same time, reduced liquidity in the ETF's locked positions may amplify the volatility of spot prices.
For retail investors, ETFs certainly lower the investment threshold, but high management fees, premiums, and tracking errors can also weaken long-term returns.
If you want to accurately assess the real market reaction after each ETF launch, utilizing Mlion.ai's data visualization tools and market trend prediction modules can allow you to adjust your portfolio ahead of others and dynamically respond to market changes.
Conclusion
The dilemma of the Ethereum ETF is not the end of altcoin ETFs. On the contrary, it is a valuable trial-and-error process that provides clear lessons for future entrants.
Truly smart project teams are sidestepping the traps of the Ethereum model, attempting to introduce staking rewards, reduce fees, and strengthen asset narratives, precisely addressing the different needs of institutions and retail investors.
The policy dividend window brought by Paul Atkins will not remain open forever.
Only those ETFs that can understand market feedback and quickly iterate their product structures will have the chance to stand out in this gold rush.
In such a stage filled with changes and intertwined opportunities, leveraging Mlion.ai's AI investment research assistant to make the complex market transparent and controllable is undoubtedly your biggest trump card in this new round of crypto explosion.
Disclaimer
The above content is for information sharing only and does not constitute any investment advice! The risks of investing in crypto assets are extremely high; please make decisions cautiously based on your own risk tolerance.
