Billions for the big altcoins: which ETFs come first?

Donald Trump is here, Gary Gensler is gone: The mood in the crypto market could hardly be better. Since American investment firms can count on a more crypto-friendly SEC under Republican leadership, new ETF applications have been raining almost daily. Ripple is seen as a strong candidate for an ETF launch this summer, but Solana and Litecoin also have good chances. A list shared a week ago by Bloomberg expert Eric Balchunas on X shows a remarkable 33 crypto-ETF applications, including five applications from different asset managers alone for XRP Spot ETFs, six for Solana Spot ETFs and three for diversified crypto-basket ETFs.

Looking at current developments on the decentralized Polymarket, Solana and Litecoin appear to be the best performers with an 86 percent chance of SEC approval each this year. This is followed by XRP with 74 percent and Dogecoin with 44 percent. SOL index funds are planned by VanEck, Bitwise, Canary Capital and 21Shares, among others.

However, according to James Seyffart, a colleague of Balchunas, the trading launch of Solana ETFs might not occur until 2026. In a interview he explained that it is still unclear whether the U.S. securities regulator will classify Solana as a commodity or a security. The review of ETF applications could take 240 to 260 days, especially since SOL has been designated as a security in ongoing lawsuits against several crypto-exchanges.

Proof-of-Work: This advantage Litecoin and Dogecoin have over Ripple and Solana

There may also be delays with Ripple ETF applications because Ripple Labs, the company behind XRP, is embroiled in a four-year legal battle with the SEC. While this could be settled in the coming months by a crypto-friendly SEC leadership, it also remains unclear with XRP whether and under what circumstances the coin will be considered a security.

This is where Dogecoin and Litecoin have a distinct advantage. Both, like Bitcoin, use the so-called Proof-of-Work consensus mechanism, which facilitates classification by the SEC. Even under Gary Gensler's leadership, the authority has never taken a PoW crypto to task. Therefore, Balchunas suspects that Litecoin is now the top contender for the next crypto-ETF approval. The SEC is said to have already conveyed comments on the S1 applications to the relevant ETF applicants.

Because the DOGE application was filed by REXShares under the "1940 Act," according to Balchunas could even be approved as early as April. Although so far only Bitwise is planning its own Dogecoin ETF, as the third and fifth largest crypto currencies, Ripple and Solana have a significantly higher market capitalization than Litecoin and Dogecoin, which would mean that upon approval significantly higher amounts would flow into these crypto.

According to a report by JPMorgan they could bring in up to US$14 billion in the first year of trading, which should make Ripple and SOL investors optimistic. However, it should be considered that the Ethereum ETFs approved in July came as a disappointment to many crypto investors. Although they have raised US$2.6 billion to date, the ETH share price is currently lower than when the index funds started trading.

Even with XRP, SOL, DOGE and LTC, it cannot be ruled out that the launch of crypto-ETFs turns out to be a "Sell-the-News" event. Ultimately, while Altcoin ETFs are a useful financial vehicle to provide easier access to new investor groups, only if there is strong interest from TradFi investors are price appreciation likely. The Bitcoin ETF sensation will not be replicated by another cryptocurrency anytime soon.