Can altcoins rebound thanks to ETFs…A comparison with Bitcoin and Ethereum

As the cryptocurrency market is broadly weak and expectations for an altseason are fading, attention is focused on whether these altcoins can lead a reversal on the back of exchange-traded funds (ETFs).

On the 22nd (Korean time), XRP, ranked 4th in cryptocurrency market capitalization, was trading at 1.90 dollars, up 2.55% from the previous day. Although it rose on the day, it is down 15.24% compared with last week.

In addition, Solana (-10.04%), Dogecoin (-15.05%), Litecoin (-19.52%), and Hedera (-17.59%) also saw their prices fall significantly compared with the previous week.

A common feature of the altcoins mentioned above is that ETFs backed by these assets have been listed or are scheduled to be listed on U.S. exchanges.

The first cryptocurrency to have an ETF launched was Solana. Solana spot ETFs began trading last month on the 29th with Bitwise's BSOL and Grayscale's GSOL, and currently a total of six Solana spot ETFs are listed on U.S. exchanges.

XRP follows, with three ETFs launched or pending listing: Canary Capital's XRPC, launched on the 13th of this month; Bitwise's XRP, launched on the 20th; and Grayscale's GXRP, scheduled for launch on the 24th.

Litecoin, Hedera, and Dogecoin each have one spot ETF that has been or will be listed.

Despite the recent consecutive launches of spot ETFs, investor sentiment toward altcoins is not particularly positive. Global macroeconomic uncertainty caused by recent shutdowns has widened losses for altcoins, which have a stronger risk-asset character compared with Bitcoin.

However, considering the cases of Bitcoin (BTC) and Ethereum (ETH), where it took time for prices to rise after ETF launches, some analysts say there remains a possibility of a reversal for altcoins. Eleven U.S. spot Bitcoin ETFs were launched on January 10 last year. At that time, Bitcoin's price was 46,100 dollars. Bitcoin then hovered around the 40,000-dollar level for several days before surging to 70,000 dollars about two months later on March 11. In Ethereum's case, its ETF launched on July 23 last year, followed by about a year of sideways movement and a rise to 4,800 dollars last August.

Securing a narrative to convince institutional investors is still cited as a task for altcoins. Bitcoin, after the introduction of ETFs last year, formed a clear narrative as "digital gold," and Ethereum formed a narrative as "future financial infrastructure," which drew capital inflows, but other altcoins are still criticized for lacking a clear investment case.

Kim Min-seung, head of the Korbit Research Center, said, "Solana remains at the level of 'a faster Ethereum,' and XRP's value proposition has become ambiguous as stablecoins dominate the cross-border payments market," adding, "If a clear narrative or real-world usage demand is not supported, inflows of ETF funds will inevitably be limited."