Author: Alex O'Donnell, CoinTelegraph; Compiled by: Wuzhu, Golden Finance

Investment analysts point out that exchange-traded funds (ETFs) that hold alternative cryptocurrencies will be launched in the United States this year, It may not be too popular with investors.

Asset management companies have submitted more than a dozen applications to launch U.S. ETFs that hold altcoins, including Solana, XRP, LTC, etc. Analysts expect many ETFs to receive approval from U.S. regulators in 2025.

However, Katalin Tischhauser, head of research at Sygnum, said the initial demand for altcoin ETFs will be weaker than core cryptocurrencies such as Bitcoin and Ethereum, and is primarily limited to retail investors.

“The market is full of excitement about the arrival of these ETFs, but no one can point out where a large amount of demand will come from,” Tischhauser notes.

Tischhauser estimates that the cumulative inflow of altcoin ETFs will reach hundreds of millions to US$1 billion, far lower than the net assets of more than US$100 billion held by US Bitcoin ETFs.

"For Bitcoin, some institutional investors and advisers are waiting for ETFs to gain access," noted Bryan Armour, head of passive strategy research at Morningstar, adding, "I expect to invest in these cryptocurrencies," There will not be the same number of investors waiting for the ETF structure. ”

Altcoin ETF is expected to be approved by the U.S. regulator. Source: Bloomberg

Early adopted by Tischhauser said investors who have enough knowledge of cryptocurrencies and understand altcoins such as SOL are usually already holding spot cryptocurrencies on the chain or through spot exchanges.

“If people were very interested in Solana or Dogecoin, they would buy it now,” Armour said.

At the same time, wealth managers and institutional investors are more likely to hold altcoins if they are included in index funds that passively track the wider cryptocurrency market, Tischhauser said.

On February 20, Franklin Templeton launched an ETF that holds both Bitcoin and Ethereum spot. This is the second crypto index ETF to enter the market after asset management company Hashdex launched the Nasdaq Crypto Index U.S. ETF (NCIQ) on February 14.

These funds only hold BTC and ETH, but may add other cryptocurrencies after regulatory approval.

Compare asset management company Grayscale's net assets to different cryptocurrencies before the ETF is launched to measure ETF demand. Source: Sygnum BankETF Advantages

Asset managers preparing to launch an altcoin ETF are more optimistic, citing a JPMorgan Chase study that predicts cumulative demand for altcoin ETFs will exceed $14 billion.

Federico Brokate, head of US operations at 21Shares, said that even cryptocurrency native investors can benefit from holding altcoins in their ETF packaging.

“This benefit actually comes down to the core strengths of ETFs, namely institutional pricing and hosting,” Brokate said. 21Shares is awaiting regulators to approve several altcoin ETFs, including funds holding SOL, XRP and Polkadot.

In addition, “you can invest where you have the rest of your portfolio with just one click.”

He added that professional wealth managers, especially independent registration for investments Advisors (RIA), also showed interest in increasing altcoin ETF configurations to distinguish them from competitors.

Independent RIA is one of the first institutional adopters of BTC and ETH ETFs, which U.S. regulators approved in 2024.

For new investment products, such as cryptocurrency ETFs, “every client base has a ‘adoption range’,” notes Matt Horne, head of digital asset strategist at Fidelity Investments.

"There are some early adopters of Bitcoin, and for others, adoption will increase over time."