In recent months, we have witnessed an unprecedented scene where ETFs for altcoins once considered speculative assets—such as SOL, XRP, DOGE—are being approved one after another. In just over a month, eight spot altcoin ETFs have been listed on the NYSE and NASDAQ, with over $700 million in total funds flowing in. However, here’s the strange part—despite continued inflows into these ETFs, the prices of the underlying altcoins have all dropped by more than 20%.

This phenomenon is actually closely related to the rapid changes in the regulatory environment. On September 17, 2025, the SEC approved a revised draft of the “General Listing Standards,” opening a fast-track for qualifying cryptocurrencies to be listed. This is a speed that far surpasses the nearly 10-year approval process for Bitcoin spot ETFs. Altcoins have completed the application-to-listing process in just six months.

Bitwise’s XRP ETF took a bold approach by directly using “XRP” as its ticker symbol, sparking debate within the industry. Meanwhile, the Solana ETF has recorded 20 consecutive days of net inflows since its listing, reaching a total of $568 million. Notably, even during a period when Bitcoin and Ethereum ETFs experienced large outflows in November, the Solana ETF continued to attract funds amid adverse conditions.

So, why aren’t altcoin prices rising? It’s because the typical “buy on expectations, sell on facts” pattern is especially prominent in the crypto market. Speculative capital takes positions in anticipation of ETF approvals, and as soon as good news materializes, they lock in profits with sell-offs. For example, XRP’s price dropped about 7.6% within days after Bitwise’s listing, with a peak decline exceeding 18%.

The macro environment also exerts pressure. Strong employment data weakens expectations of rate cuts and suppresses overall risk asset performance. Relative profit-taking in altcoins has almost plunged into deep decline zones, creating a rare divergence between Bitcoin and altcoin prices.

More fundamentally, altcoin ETFs face significant challenges in liquidity and market depth. While Bitcoin’s 1% market depth stands at $535 million, most altcoins have only a fraction of that. This means that similar capital inflows should have a larger impact on altcoin prices compared to Bitcoin, but the current “fact-based selling” phenomenon masks this effect. Market manipulation and transparency risks are also non-negligible. Illiquid altcoins are more susceptible to price manipulation, and since ETF net asset values depend on the underlying asset prices, such manipulation could directly affect ETF values and trigger regulatory investigations.

However, aside from short-term underperformance, there are hidden long-term positive factors. The approval of altcoin ETFs effectively confirms their “non-security” status from a legal perspective and provides an entry point into compliant fiat currency. From an institutional portfolio construction standpoint, ETF adoption will lead to sustained passive buying of these altcoins. While speculators are retreating, institutional capital in portfolio form is beginning to enter, forming a higher long-term bottom.

Even more interestingly, the emergence of ETFs is accelerating the stratification of liquidity in the crypto market. The first group includes ETFs for assets like BTC, ETH, SOL, XRP, DOGE, which have compliant fiat entry points and can be easily included by registered investment advisors and pension funds, enjoying a “compliance premium.” The second group consists of non-ETF assets—other Layer 1 tokens and DeFi tokens—lacking ETF channels and continuing to rely on retail investor funds and on-chain liquidity.

Innovative efforts are also worth noting. Bitwise’s Solana ETF not only provides exposure to SOL prices but also aims to distribute on-chain revenue to investors through staking mechanisms. The SEC has long regarded staking services as securities issuance, but Bitwise explicitly states “Staking ETF” in its S-1 filing and has designed a compliant structure for staking revenue distribution. If successful, the Solana ETF could not only capture price appreciation but also offer cash flows similar to dividends, significantly surpassing the appeal of a non-yield Bitcoin ETF.

As Bitcoin declines from its early 2025 high of $126,000, the entire crypto market remains shadowed by downturns. However, this does not stop the listing of altcoin ETFs, and over the next 6 to 12 months, more assets like Avalanche and Chainlink may attempt to follow this path. The BNB ETF is seen as the ultimate test of the SEC’s new regulatory stance under the new leadership. For Litecoin ETFs, daily net inflows generally remain in the hundreds of thousands of dollars, with some days seeing zero inflows. The HBAR ETF also saw about 60% of its initial week’s funds concentrated in inflows, which then clearly declined.

Once driven mainly by speculation and storytelling, this market is irreversibly evolving into a new order centered on compliance channels and institutional portfolio building. The current stagnation in altcoin prices may simply be a short-term adjustment, or perhaps just part of this transformative process.