ETF offerings linked to lesser-known altcoins continue to arrive as issuers look to seize a first-to-market advantage.
A slew of exchange-traded funds focused on smaller cryptocurrencies are making their Wall Street debut this week, with issuers going ahead with the listings amid the ongoing government shutdown.
The Bitwise Solana Staking ETF (BSOL), the first of its kind, launched Tuesday with full staking exposure to Solana — the sixth-largest token — yielding around 7%, according to Dune Analytics. Additional funds focused on little-known cryptos including Litecoin and Hedera’s HBAR also started trading.
The US Securities and Exchange Commission shutdown guidance allows some filings to go effective automatically after 20 days — a procedural quirk crypto ETF issuers appear to have capitalized upon. “The early listings could give issuers a lasting advantage in a crowded field, where first-to-market status can define long-term success,” wrote Bloomberg Intelligence analysts James Seyffart and Eric Balchunas.
Hunter Horsley, chief executive officer of Bitwise Asset Management, dubs it an opportune moment to launch the Solana fund — and said it would’ve happened with or without the shutdown.
“SEC Chair Paul Atkins and the crypto task force have been very clear with their intentions of opening up the asset class,” he said. “The outlook for digital assets, in general, has never been more constructive.”
Given the successes seen by ETFs tied to Bitcoin and Ether, it’s no wonder issuers are looking to put out additional products focused on the ecosystem. Bitcoin and Ether ETFs now manage more than $170 billion, and issuers are rushing to expand their digital-asset lineups. BlackRock Inc.’s Bitcoin fund, known by its ticker IBIT, was recently calculated to be generating fee revenues of more than $200 million annually on assets of around $100 billion, per Bloomberg Intelligence.
The spot-Solana fund is seen as another milestone for an industry that has longed to access smaller tokens via the easy-to-trade ETF wrapper. A few products already offer indirect exposure to Solana — including those that stake tokens to help validate blockchain transactions, provide leveraged exposure or track futures. The cohort has attracted about $1.5 billion in flows so far this year. Data compiled by BI’s Seyffart show roughly two dozen ETF filings tied to Solana since 2024.
Yet this week’s debuts come at an inopportune time for the complex of smaller coins, also known as altcoins. A market cap-weighted index tracking the 50 smallest tokens has sold off recently. Thinly traded and dominated by retail holders, these assets often serve as early barometers of risk appetite. Their latest decline signals that speculative money is pulling back from the edges of crypto once again.
In addition, there are now more than 100 crypto-focused ETFs trading in the US, according to data compiled by Bloomberg, meaning that each new entrant faces stiff competition for investor dollars. Funds focused on obscure tokens might have a more difficult time attracting mass appeal.
“While I expect some investors to jump in immediately, many others may wait for a broader, more visible wave of approvals once the SEC reopens,” said Roxanna Islam, head of sector and industry research at ETF shop TMX VettaFi. “The crypto ETF market, however, is already oversaturated, which could hinder some of the smaller or more obscure crypto funds from gaining significant inflows.”