Altcoin ETFs Test Demand for Anything Other Than Bitcoin

Bitcoin ETFs have been all the rage since they launched last year, but what about funds for smaller coins?

The first XRP and Solana ETFs could become test cases on whether there’s interest in the market for crypto-themed funds featuring lesser-known currencies. Apparently, Teucrium Investment Advisors thinks there is: On Tuesday, the firm launched its 2x Long Daily XRP ETF, a leveraged fund that uses futures and options and trades on NYSE Arca as XXRP.

And one big name, Fidelity, sees additional opportunity. The company is seeking regulatory approval for a spot-price Solana exchange-traded product that would trade on Cboe. Currently there are no US-listed spot Solana funds in operation, although the first futures-based Solana ETFs launched March 20.

“Solana is one of the ‘Big 3’ after bitcoin and ethereum,” said financial consultant Tyrone Ross Jr., the former CEO and cofounder of Onramp Invest. “There will be muted interest for these, as most financial advisors are still focused on digesting bitcoin and the ethereum ETFs.” 

Three’s Company

The runaway success of bitcoin in ETF form has benefited several companies, most notably BlackRock, whose iShares Bitcoin Trust ETF represents $48 billion in assets, more than three times that of the next-biggest spot bitcoin fund, the $16 billion Fidelity Wise Origin. The ether ETFs on the market have reached about $7.5 billion in total assets, according to data from VettaFi.

“The ‘use’ for Solana comes from using the actual blockchain, which is the equivalent to ‘high-speed’ rail, based on its ability to compute transactions quickly,” Ross said. “You lose that when you put it in an ETF, unless you’re just looking for the potential price appreciation.”

There are just two US-listed futures-based Solana ETFs available:

• Volatility Shares Solana ETF ($3 million in assets, 95 basis points in net fees)
• Volatility Shares 2x Solana ETF ($4 million, 185 basis points)

Bitcoin dominates the crypto space, and demand for anything else may take time, said Mike Alfred, managing partner of Alpine Fox, a private investment partnership. “That could change after the market has more clarity on tariffs and short-term macro headwinds,” he said.

Into the Ether. If the uptake of ether ETFs was low relative to those with exposure to bitcoin, Solana ETFs could be low relative to ether funds, said Bryan Armour, director of passive strategies research for North America at Morningstar Research Services. It’s notable that Grayscale’s Solana Trust is relatively small, at just $66 million, he said. 

Smaller cryptocurrencies will likely have even more of a challenge building demand in ETFs, he said. “Ethereum’s struggles might be a warning sign for some of the other cryptocurrencies entering the ETF market,” Armour said. “It just seems like with each one of these, there’s a magnitude less down from the bitcoin [ETFs]. It might end up being more of a niche product.”