Exploring Doubts About Spot ETF Funds for Solana and Cardano
As mentioned earlier, facing challenges, Solana and Cardano are unlikely to secure approval as spot ETFs in the United States, potentially struggling to attract investors.
Expressing skepticism, Katalin Tischhauser, the head of investment research at Sygnum Bank, recently shared her reservations about this scenario.
- The main obstacle for crypto ETF approval in the US revolves around the lack of suitable trading platforms approved by the SEC for market supervision.
- Currently, the SEC views cryptocurrency exchanges as “unregulated securities exchanges,” limiting their acceptance.
- CME futures for Bitcoin and Ethereum provide a temporary solution until market surveillance concerns are addressed.
- Without the SEC acknowledging platforms like Coinbase as surveillance markets, creating additional crypto ETFs remains uncertain.
Limited Demand for Altcoin ETFs
Tischhauser highlights the restricted demand for altcoin ETFs due to various factors affecting Ethereum and other cryptocurrencies.
- The demand for ETFs beyond Bitcoin and Ethereum is deemed insignificant, with lower recognition for cryptocurrencies like Ethereum and Solana outside the crypto sphere.
- Spot Bitcoin ETFs have recorded substantial inflows totaling $17.7 billion, portraying strong market demand.
- On the contrary, ETFs for Ethereum saw slower adoption initially, experiencing predominant outflows attributed to the exit from the Grayscale Ethereum Trust.
- Despite some demand for the Solana Trust, its assets under management remain significantly lower compared to Bitcoin and Ethereum trusts.
- BlackRock representatives also doubt the emergence of numerous crypto ETFs in the near future due to underlying demand constraints.
Encouraging Optimism for Future Altcoin ETFs
Contrary to prevailing pessimism, Matthew Sigel, head of digital asset research at VanEck, expresses a more positive outlook on the potential for altcoin-based ETFs.
- Sigel believes that not only Bitcoin and Ethereum but also other cryptocurrencies can have ETFs, citing the variety of ETPs in the European market offering options on single coins and baskets.
- VanEck aims to drive this innovation in the US; submitting an ETF application for Solana on June 27 indicates confidence in the sector.
- Aggregate flows for spot ETFs on Ether turned positive on August 1st, particularly with the Grayscale ETHE fund showing minimal outflows and significant inflows in a single day.
Hot Take: Reflecting on the Future of Altcoin ETFs
Considering the contrasting views on altcoin ETFs, it remains uncertain whether Solana and Cardano will secure approval as spot ETFs in the US amidst market surveillance concerns and demand constraints.
However, with efforts from companies like VanEck to pioneer altcoin ETFs in the US and evolving market dynamics, the landscape for altcoin ETFs may witness transformations in the near future.
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