ETF offerings tied to lesser-known altcoins continue to arrive as issuers look to seize the advantage of being first to market.
A slew of exchange-traded funds focused on smaller cryptocurrencies are debuting on Wall Street this week, as issuers continue their listings amid the ongoing government shutdown.
The Bitwise Solana Staking ETF (BSOL), the first of its kind, launched on Tuesday with full exposure to Solana – the sixth largest token – with a yield of around 7%, according to Dune Analytics. Additional funds focused on little-known cryptocurrencies, including Litecoin and Hedera’s HBAR, have also begun trading.
The U.S. Securities and Exchange Commission’s shutdown guidelines allow certain filings to take effect automatically after 20 days — a procedural quirk that crypto ETF issuers appear to have capitalized on. “Early listings could give issuers a lasting advantage in a crowded field, where being first to market can define long-term success,” wrote Bloomberg Intelligence analysts James Seyffart and Eric Balchunas.
Hunter Horsley, CEO of Bitwise Asset Management, sees this as an opportune time to launch the Solana fund – and said it would have happened with or without the shutdown.
“SEC Chairman Paul Atkins and the Crypto Task Force have been very clear about their intention to open up the asset class,” he said. “The outlook for digital assets, in general, has never been more positive.”
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Given the success of Bitcoin and Ether-linked ETFs, it is no wonder that issuers are looking to offer additional ecosystem-focused products. Bitcoin and Ether ETFs now manage more than $170 billion, and issuers are racing to expand their range of digital assets. BlackRock Inc.’s Bitcoin fund, known by its symbol IBIT, was recently calculated to generate fee income of more than $200 million a year on assets of about $100 billion, according to Bloomberg Intelligence.
The spot-Solana fund is seen as another milestone for an industry that has long aspired 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 contracts. This cohort has attracted approximately $1.5 billion in flows so far this year. Data compiled by BI’s Seyffart shows roughly two dozen Solana-linked ETF filings since 2024.
Still, this week’s debut comes at an inopportune time for the complex of smaller coins, also known as altcoins. A market cap-weighted index that tracks the 50 smallest tokens sold out recently. Little traded and dominated by retail investors, these assets often serve as primary barometers of risk appetite. Their latest drop indicates that hot money is once again retreating from the confines of crypto.
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Additionally, according to data compiled by Bloomberg, there are now more than 100 crypto-focused ETFs in the United States, meaning each new entrant faces stiff competition for investors’ dollars. Funds focused on obscure tokens may have a harder 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 boutique TMX VettaFi. “The crypto ETF market, however, is already oversaturated, which could prevent some of the smaller or more obscure crypto funds from achieving significant inflows.”
