Despite doubts surrounding their approval, investment bank JP Morgan has predicted that the expected XRP and Solana ETFs could mirror Bitcoin ETFs and attract at least $14 billion in investments by 2025.
According to a report on Bloomberg, the analysts from JP Morgan based their prediction on the possibility of a friendlier regulatory framework under Donald Trump’s incoming presidency, which begins on January 20, 2025. According to the JP Morgan prediction, XRP and Solana ETFs could attract between $4 billion and $8 billion and $3 billion to $6 billion in net assets with their first six months of trading.
XRP and Solana ETFs Likely to Mirror Bitcoin
The prediction is based on the adoption trends that analysts observed during the initial days of the Bitcoin and Ethereum ETFs, which garnered 6% and 3% adoption rates during their first months of trading. The JP Morgan report further noted that the new crypto-based ETFs were likely to mirror the impact of Bitcoin ETFs that enabled the pioneer cryptocurrency to regain the $50,000 mark less than a month after its debut. Bitcoin ETFs reportedly accounted for at least 75% of BTC investments during that period, surpassing $110 billion in cumulative inflows by their first anniversary.
JP Morgan Wary of Altcoin-Based ETFs
Nonetheless, JP Morgan isn’t sure how altcoins would perform, given that Bitcoin and Ethereum have created their niches and consistently demonstrated a steady demand. The investment bank observed that investor interest in altcoins like XRP and SOL wasn’t too steady yet and could quickly shift overnight; the report stated that: “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.”
As a result, JP Morgan suggested that the XRP and Solana ETFs could struggle due to the tokens’ limited market depth.
2025 Could be the Year of ETFs
On the positive side, there is already some positive investor sentiment surrounding the tokens pending the approval of the anticipated XRP and Solana ETFs. Leading ETF providers like VanEck, 21Shares, Bitwise, WisdomTree, and Canary Capital are already seeking approval for ETPs for the XRP and Solana ETFs. According to Nate Geraci, co-founder of the ETF institute, the year 2025 is likely to see an overflow of crypto ETFs that could see the companies attract other crypto ETF products, such as Ethereum, once their initial applications get approval.
Since the initial approval for US-listed spot Bitcoin ETFs, the US SEC went on to approve eight additional Ethereum-based ETFs from leading companies like Grayscale, BlackRock, and Fidelity in May 2024. While the outlook for other crypto-based ETFs like the XRP and Solana ETFs may have looked bleak, especially based on outgoing SEC Chair Gary Gensler’s opinion that most altcoins qualified as securities, it may appear that things could be changing.
Conclusion
As Gary Gensler prepares to leave office and usher in Donald Trump’s nominee for SEC Chair Paul Atkins, there’s renewed optimism that the XRP and Solana ETFs could receive approval. Should the Senate approve the nomination of the incoming SEC chair, many industry players believe a level playing field could lead to more incredible crypto innovation and the launch of new crypto products.
Frequently Asked Questions (FAQs)
Do Crypto ETFs use custodians?
Bitcoin ETFs store crypto assets with custodians who have hardware wallets, multi-sig protocols, and insurance policies to minimize the risk of theft.
What fees are associated with Bitcoin Spot ETFs?
Crypto ETFs will likely have management fees, similar to traditional ETFs, to cover the fund’s costs. Always review the applicable fees before investing in crypto ETFs.
What was the first Spot Bitcoin ETF?
Canada was the first country to approve Bitcoin Spot ETFs in early 2021. Since then, several other countries have followed suit, with the US SEC making its first approval for trading ETFs in January 2024.
