Altcoin ETFs Launch: SOL, LTC & HBAR Hit U.S. Markets

A new wave of altcoin exchange-traded funds (ETFs) has hit the market. The long-awaited ETFs based on Solana (SOL -2.97%), Litecoin (LTC -1.68%), and Hedera (HBAR -1.43%) are finally here. 

Asset manager Bitwise has announced the launch of the Solana Staking ETF (NYSE: BSOL) while Canary Capital announced the launch of the Canary Litecoin ETF  (Nasdaq: LTCC) and Canary HBAR ETF (Nasdaq: HBR), which CEO and founder Steven McClurg called a “landmark moment in what has been a pivotal year for the crypto industry.”
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A few hours into their first trading day, $BSOL recorded $33 million in volume, $HBR pulled $6 million, and $LTCC had $1 million worth of trading volume.

While the launch of altcoin ETFs was expected this month, the development still came as a surprise due to the ongoing government shutdown and uncertainty surrounding regulations and macroeconomic conditions. The crypto market itself has been struggling with significant volatility.

On October 10th, the crypto market was hit with a deep decline that saw more than 1.6 million traders lose over $19 billion in leveraged positions, marking the largest ever liquidation event tracked by crypto data provider CoinGlass. 

The wipeout turned the historically bullish month for Bitcoin (BTC -1.67%) and the broad crypto market, which earned it the moniker “Uptober”, into a red one. The ongoing recovery, however, is attempting to turn it green, though. Bitcoin’s October performance is currently positive by 1.68%.

The entire crypto market had taken a hit, sending the total market capitalization to about $3.7 trillion from the almost $4.4 trillion peak that was made just a few days prior to the massive liquidation event.

And this is why, even the anticipation of an ETF has yet to create momentum in any of the related altcoins. But that may mean that these crypto assets may enjoy an upside once the ETF is live and trading, capturing demand and capital flow from institutions. 

So, let’s check out all that has been happening in the land of altcoin ETFs.

How These ETFs Launched During a U.S. Government Shutdown

The approval of altcoin ETFs was a done deal, with Bloomberg’s ETF experts giving a 95% chance for the  US Securities and Exchange Commission (SEC) to greenlight ETFs based on Solana, XRP (XRP -0.93%), and Litecoin in the latter half of this year.

On October 1st, Bloomberg Senior ETF analyst Eric Balchunas posted, “Crypto ETF approval season has officially arrived!” on X.

But things took a turn when the government shut down. As Senate Republicans and Democrats worked on resolving a budget impasse, the SEC stated that it would have limited personnel “until further notice.” As per the regulator’s contingency operations plan, it would “not review and approve applications” for products or provide “non-emergency support to registrants” during this period.

As a result, Nate Geraci, co-founder of the ETF Institute, noted that the “shutdown would definitely impact the launch of new spot crypto ETFs” and that “ETF Cryptober might be on hold for a bit.”

So, the market has been expecting a delay in approvals as the government shutdown entered into the second-longest funding lapse in history, with the Senate failing to advance a House-passed bill to fund the government for the 12th time last week.

But the crypto market doesn’t need to wait as ETFs go live this week.

A streamlined approval process was key here, which paved the way for a faster way for new crypto products to come to market. Bitwise president Teddy Fusaro had called this “a watershed moment in America’s regulatory approach to digital assets.”

In July, the securities regulator issued an order that detailed the criteria that asset managers and exchanges must meet to approve new spot crypto ETFs without the lengthy regulatory review. Then last month, the SEC approved the proposed rule changes by NYSE, Nasdaq, and Cboe Global Markets to adopt generic listing standards for these new ETFs.

But how did it happen while the government was still in shutdown?

According to Greg Xethalis, general counsel at Multicoin Capital, ETF issuers still had to complete a few key steps, including registering under the Securities Act of 1933 via an S-1 and under the ’34 Act via a listing submission via Form 8-A.

Usually, exchanges also file a rule-change under Section 19(b)(4) of the Exchange Act. However, the recently adopted generic listing standards (GLS) now allow an exchange to list crypto-based products without a separate filing, so long as the product class meets the eligibility criteria and the issuer’s registration statement is effective.

“Here’s the crux we weren’t sure on,” Xethalis said, under Section 8(a) of the ’33 Act, an S-1 becomes automatically effective 20 days after filing unless the issuer files a delaying amendment. On October 8th, Bitwise Asset Management filed its S-1 for a Solana-staking ETF without a delaying amendment, pointing to an auto-effective date of October 27th. At that point, the only remaining hurdle was whether the exchange would promptly list shares under the generic rules. He added:

“Would the exchanges list products that were not taken effective through SEC acceleration. This is not a legal question — these products are fully legally processed — it’s a question of practice and norms.”

As evident from the altcoin ETFs’ debut on mainstream exchanges, the NYSE has determined that they are interested in listing Bitwise Staking Solana ETF, while the NASDAQ is doing the same for Canary’s Litecoin and HBAR ETFs.

What SOL, LTC, and HBAR ETFs Mean for Mainstream Adoption

The official listing of the ETFs came amidst uncertainty.

On Monday, Balchunas noted that crypto fund management Canary Capital has “filed 8-As for Litecoin and HBAR ETFs joining Bitwise, which filed one for Solana.” These applications, he said, are rumored to be launching this week, along with Grayscale’s Solana ETF. While not a done deal, Balchunas said, preparations are clearly being made.

A few hours later, he again took to X to state that the ETFs are “Confirmed. The Exchange has just posted listing notices for Bitwise Solana, Canary Litecoin, and Canary HBAR to launch TOMORROW and grayscale Solana to convert the day after.” 

This time, altcoin ETFs seemed like a done deal, assuming there’s no last-minute intervention from the SEC. “Looks like this is happening,” he added.

James Seyffart, ETF analyst at Bloomberg Intelligence, also chimed in, noting that they now “expect Solana, Litecoin and HBAR to get their first pure spot ETFs here in the US this week.”

The market finally got its confirmation when asset manager Bitwise announced that its SOL-based product is ready to go. “Introducing $BSOL — the Bitwise Solana Staking ETF. Starts trading tomorrow,” it said in a post on X.

The Bitwise Solana Staking ETF (BSOL) is the first US exchange-traded product (ETP) that gives 100% direct exposure to Solana (SOL). “The Fund offers investors the opportunity to benefit from staking rewards through professionally managed staking, while capturing the potential growth of one of the fastest, most efficient, and most widely used blockchains,” read the official website.

Solana is the biggest competitor of Ethereum (ETH -2.72%), the most widely used Layer 1 blockchain, and BSOL is not only giving full exposure to the asset but also staking rewards, which is currently not offered by Ether Spot ETFs.

To maximize Solana’s staking rewards for investors, Bitwise will be staking 100% of its Solana holdings. The asset manager will stake in-house, utilizing its own institutional staking capabilities while leveraging the technology from Helius, a Solana staking provider.

As per its website, Bitwise is offering an average staking reward rate of 7.34%. The rate, however, isn’t guaranteed and is subject to change.

Bitwise is currently charging zero fees, waiving them completely for a period of three months starting the day the shares get listed on the exchange or until the assets in its Trust reach $1 billion. After that, the Fund’s expense ratio will be 0.20%, which is the same as the fees charged on the manager’s Bitcoin ETF (BITB) but lower than BlackRock’s 0.25% on IBIT and Arka’s 0.21% on ARKB.

“We believe Solana is a key platform for enabling capital markets to come onchain and is perfectly positioned for this moment,” said Bitwise. “Solana is headed into the mainstream—and we think it’s just getting started.”

Canary’s McClurg also confirmed that their Spot Litecoin and HBAR ETFs are effective and ready to be listed on the Nasdaq this week. This is just the beginning, though, as he recently told Reuters, the firm will be rolling out more crypto products in the coming weeks and months.

SOL, LTC, HBAR: Tickers, Fees, Staking—What Investors Get

Starting today, institutional investors can now trade three more crypto assets in a legally compliant manner through the investment vehicles that they are familiar with, as SOL, LTC, and HBAR officially began trading on a mainstream exchange.

This is an opportunity for institutional investors to diversify into different crypto narratives.

Solana is an L1 blockchain that offers fast speeds and affordable costs, supporting dApps, DeFi,  NFT marketplaces, and much more. It is the 6th largest cryptocurrency with a market cap of $111 billion as SOL trades at around $200, up a mere 1.6% in the past 24 hours and 5% year-to-date (YTD), while being down 31% from its peak above $293 that it hit at the beginning of the year.

While SOL price is now lagging, the asset has been one of the biggest runners of this bull cycle. Since the FTX collapse, which affected SOL severely, crashing its price from $260 in November 2021 to sub-$10 in December 2022, the crypto asset has rallied 30x.

As asset manager CoinShares noted in its recent report on Solana, having a loyal community helped it recover and reach new heights. Moreover, partnerships with Visa and financial giants like Franklin Templeton and BlackRock, expanding their funds onto its network, contributed to its success.

Data from DeFi Llama also shows that interest in Solana-based applications is strong, with the total value locked (TVL) surging past $13 bln to new highs last month. Currently, its TVL is sitting at just under $12 billion.

Now, the asset is all set to get its own ETF. Besides Bitwise and Canary Capital, Franklin Templeton, Fidelity, CoinShares, Grayscale, and VanEck have also filed for Solana ETFs.

Silver to Bitcoin’s gold, Litecoin is a $7.78 bln market cap cryptocurrency, sitting at the 30th spot. This peer-to-peer crypto was created based on the Bitcoin protocol, but faster, cheaper, and more private. As of writing, LTC is trading at $102.32, up 4% in the past 24 hours. It is currently down more than 75% from its ATH of $410 from over four years ago.

“As one of the longest-running blockchains, Litecoin has demonstrated a proven track record of security and reliability with significant enterprise-class use cases. With LTCC, we are proud to provide investors an SEC-registered vehicle to gain exposure to this important digital asset.”  

– Canary CEO McClurg

Hedera is a decentralized public network to build fair and secure applications. The platform is owned and governed by a council of global innovators.

“Hedera is built for what’s next; enterprise tokenization, high-speed settlement, real-world Web3 infrastructure,” said McClurg. And as tokenization enters into the real-world adoption phase, “HBR gives investors a front-row seat to that evolution.”

HBAR is actually the only coin to have a nice uptrend in response to the news of the upcoming ETF. The $8.6 billion market cap coin is up over 16% in the past 24 hours and now trades at $0.2076. But so far this year, HBAR is down 24% and 63.7% from its ATH of $0.5692 that was hit in 2021.

With prices of the altcoins under pressure, the newly launched ETFs could attract much-needed capital into these assets, potentially supporting a market recovery.

Among these three, Solana ETF is expected to make a big splash, not only because it’s a top ten asset with a lot of development, but also due to launching with staking, thus enabling investors to earn yield on their holdings and boosting their returns on investment.

For now, though, flows in Solana have cooled down, recording just $29.4 million in inflows. Solana ETP inflows have plummeted by over 81% from the previous week.

But Bitcoin still captured investor attention, attracting $931 million in inflows, bringing its cumulative inflows since the Federal Reserve began cutting rates to $9.4 billion and YTD inflows to $30.2 billion, which is well below the record $41.6 billion last year.

“The ongoing US government shutdown, and the resulting absence of key macroeconomic data, has left investors with little guidance on the direction of US monetary policy,” wrote CoinShares Head of Research James Butterfill. “However, the lower-than-expected CPI data released on Friday helped restore some confidence that further rate cuts are likely this year.”

Ethereum, meanwhile, saw outflows totaling $169 million for the first time in five weeks. XRP had $84.3 million in inflows.

After Bitcoin & Ethereum: The Next Wave of U.S. Crypto ETFs

The ETF mania is finally gaining traction as issuers rush to give institutions exposure to altcoins, close to two years after the first spot ETFs were approved in the US.

It was in early 2024 that the SEC approved the first US ETF that tracks the price of Bitcoin. This moment marked a major victory for the digital asset industry, which has been trying for a decade to launch such a product.

Crypto exchange Gemini founders, Cameron and Tyler Winklevoss, were the first ones to file for a spot Bitcoin ETF application back in 2013, but were rejected multiple times.

Grayscale Investments, meanwhile, launched a Bitcoin Investment Trust. In 2020, the trust became an SEC-reporting entity and the first publicly traded Bitcoin fund in the US. Then in late 2021, it filed with the SEC to convert it into an ETF, which was rejected the following year.

In 2023, a federal appeals court ruled in Grayscale’s favor, saying the regulator didn’t justify rejecting its ETF proposal, and the agency opted not to appeal it. The same year, BlackRock filed a spot Bitcoin ETF application with the SEC, and on January 10th, 2024, the agency approved 11 proposals to launch BTC ETFs. Six months after that, spot Ethereum ETFs were also approved.

And since then, institutional investors have been pouring massive amounts of money into the crypto ETF market. 

Spot Bitcoin ETFs have actually been a roaring success, with the issuers having amassed $155.89 billion in total net assets, as per SoSo Value.

Data from Farside shows that October started on a bullish note with investors putting money into Bitcoin ETFs for seven consecutive days, resulting in $5 billion in inflows. This helped BTC price hit a new all-time high above $126,000 on October 6th. 

As of writing, BTC/USD has been trading around $115,000. ETF inflows, however, are yet to gain strong momentum. 

Ethereum Spot ETFs, meanwhile, have recorded $28.35 billion in total net assets. In the first eight consecutive days of inflows in early October, ETH ETFs recorded nearly $1.3 bln in inflows. But while Bitcoin ETFs have started to capture some flows, ETH ETFs haven’t. In fact, the opposite is happening, with institutions selling.

ETH is currently trading around $4,150, down 16.2% from its $4,945 peak it hit in August.

Given the success of Bitcoin and Ethereum ETFs, the market has been trying to launch ETFs based on altcoins, including XRP, DOGE (DOGE -1.7%), ADA (ADA -1.76%), NEAR (NEAR -2.04%), AVAX (AVAX -0.05%), DOT (DOT -0.65%), LINK (LINK -2.53%), TRX (TRX -0.22%), PENGU (PENGU -0.88%), TRUMP (TRUMP -2.52%), SUI, and SEI (SEI -1.38%), among others. With a more crypto-friendly administration in the White House, optimism across the market has been on the rise.

Will Altcoin ETFs Spark an Altseason? What to Watch Next

The debut of Solana, Litecoin, and Hedera ETFs is yet another historical milestone for digital assets, signaling the growth of crypto’s institutionalization. What began with Bitcoin and Ethereum has now evolved into a diversified, regulated investment landscape where altcoins are now also gaining a footing on mainstream exchanges.

While the immediate impact of these ETFs may be muted, this is a structural shift.  With the SEC’s streamlined framework, these launches can set the tone for the next wave of approvals, bringing dozens more altcoins under the ETF umbrella. 

With a pivotal Fed meeting set to take place this week, the launch of these ETFs could inject fresh liquidity into altcoins and reignite interest across the broader crypto market, even potentially setting the stage for the long-anticipated altcoin season!