JPMorgan says altcoin-ETF inflows may be as high as US$14 billion

JPMORGAN Chase analysts estimate that a proposed batch of exchange-traded funds (ETFs) holding alternative cryptocurrencies may attract inflows of as much as US$14 billion should they get approved by the US Securities and Exchange Commission (SEC).

Analysts at the New York-based bank predict the suite of proposed Solana ETFs will take in anywhere from US$3 billion to US$6 billion within six to 12 months while the cohort of XRP funds will gather US$4 billion to US$8 billion in the same time period.

To come up with the prediction, JPMorgan looked at the so-called adoption rate of existing spot-cryptocurrency ETFs. Bitcoin funds held some US$108 billion in assets at the time of the analysis – comprising roughly 6 per cent of the token’s market capitalisation. The funds were introduced to the market exactly a year ago. Ether ETFs gathered US$12 billion since their launch six months ago, a penetration rate of 3 per cent of the coin’s market value.

While JPMorgan expects Bitcoin, the world’s largest digital asset, to continue to be the favoured crypto of choice for investors, the analysts say Solana and XRP could generate significant interest too, though there are questions about how much.

“The key question here remains the uncertainty of investor demand for additional products and whether new crypto ETP (exchange-traded product) launches will matter,” JPMorgan analysts including Kenneth Worthington wrote in a note.

The SEC last year received a handful of applications for funds tracking all types of crypto such as XRP, the third-largest digital token; Solana, the world’s sixth-largest; and Litecoin, a much smaller coin. The slew of filings is indicative of an industrywide push to open the asset class to the masses.

Cryptocurrencies have emerged as one of the key themes around Donald Trump’s election win in November. The president-elect, a one-time Bitcoin sceptic turned advocate, galvanised the digital-asset community with promises to reverse a regulatory crackdown under President Joe Biden. So far his actions have aligned with the industry’s interests, especially with the naming of industry proponent Paul Atkins to replace crypto nemesis Gary Gensler as chair of the SEC and creating a new post dedicated to artificial intelligence and crypto.

JPMorgan acknowledged that progress on ETFs beyond Bitcoin and Ether may be slow due to the change of administration, especially given the lack of regulatory clarity. Still, the analysts “expect other ETP applications to be submitted – and perhaps approved – in 2025”. BLOOMBERG