ETF approval doesn't even count as good news anymore?

Author: zhou, ChainCatcher

Over the past month, a series of emerging crypto projects—including DOGE, XRP, Solana (SOL), Litecoin (LTC), Hedera (HBAR), and Chainlink (LINK)—have successively received approval for spot ETFs to be listed. Contrary to general market expectations, the prices of these assets have not soared due to the listing of ETFs. Instead, a phenomenon of continuous capital inflows but significant price pullbacks has sparked reflection: Does ETF approval still provide long-term effective support for crypto prices?

1. Price Pressure: Short-Term Sentiment and Speculative Washouts

Between late October and November, the market witnessed a wave of newly listed ETFs for emerging crypto assets. However, according to SoSoValue data, a disconnect between continuous capital inflows and price crashes has been widely observed in these assets:

• Solana (SOL): Since its listing at the end of October, the SOL ETF has recorded net inflows for four consecutive weeks, with total net assets reaching $918 million, of which Bitwise and Grayscale ETFs contributed $631 million and $148 million, respectively. However, the spot price of SOL has dropped from around $184 on October 31 to around $143 now—a decline of more than 20%.
• XRP: The first XRP ETF was launched on November 13, with a first-day trading volume of $59.22 million and continued net inflows starting the next day. Yet, the spot price of XRP fell by over 20% from $2.38 on November 13 and is currently hovering around $2.2.
• HBAR: After being listed on October 28, the HBAR ETF has achieved net inflows for five consecutive weeks, with total net assets reaching $65.49 million, but the spot price of HBAR has dropped by nearly 20%.
• DOGE: The DOGE ETF saw no net inflow on its first day of listing on November 24, with a trading volume of $1.41 million. The two currently listed DOGE spot ETFs have a total net asset value of $6.48 million, with no significant price fluctuations observed for DOGE.
• LTC: The LTC spot ETF was listed on November 5 and has accumulated a total net inflow of $7.26 million, but there have been several days with zero net inflow over the past month. As a result, the LTC price has dropped by about 14% since the Canary LTC spot ETF was listed on October 28.

It can be seen that, except for the Litecoin ETF, all other crypto ETFs have shown continuous capital inflows, but their prices have universally fallen or consolidated.

The reason for this disconnect may stem from a combination of macro factors and speculative behavior.

First, it must be acknowledged that the overall environment of the crypto market during the ETF approval period was not one of exuberant bull market sentiment. The performance of core assets confirms this: Bitcoin ETFs saw net outflows of $3.48 billion in November, and Ethereum ETFs saw net outflows of $1.42 billion. The massive outflows from core assets created strong overall negative sentiment and macro headwinds, which drowned out the incremental benefits brought by emerging ETFs. In such an environment, “buy the rumor, sell the news” behavior led speculators to sell off en masse when the good news materialized, generating short-term selling pressure.

Second, during market downturns, the selling sentiment for altcoins with relatively poor liquidity is amplified. Compared to Bitcoin, assets like XRP and SOL have shallower market depth and limited capacity to absorb sell-offs. At the same time, the pace of capital inflows is relatively slow, with institutions still in a wait-and-see mode—their gradual allocation speed is unable to immediately offset the concentrated dumping by whales and speculators.

In short, the short-term disconnect between ETF inflows and crypto prices is a result of speculative washouts, macro headwinds, and the lag in institutional capital deployment. This does not mean the bullish catalyst has failed; rather, it reminds investors that the value of ETFs must be sought from a longer-term perspective and within the context of institutional portfolio allocation.

2. Long-term Value: Institutional Allocation and Ongoing Capital Inflows

Since short-term price performance is disrupted by external factors, the value of ETFs must be examined from two core dimensions: the sustainability of institutional capital inflows and the asset’s differentiated competitive advantage.

This value is first reflected in the changing attitude of traditional financial giants. One of the world’s largest asset managers, Vanguard Group (Vanguard Group)—which had previously maintained a conservative stance towards crypto assets—has announced it will allow trading of Bitcoin ETFs. For years, its executives believed cryptocurrencies lacked intrinsic value: they generated no cash flow and were unsuitable for long-term retirement strategies. They regarded digital assets as speculative tools rather than core portfolio investments. After Bitcoin ETFs launched in January 2024, the company refused to offer these products and even restricted clients from purchasing competitors’ funds.

Now, Vanguard allows investors to trade BlackRock’s spot Bitcoin ETF, shifting its role from a critic to a distributor. This move undoubtedly signals to the market that ETFs, as compliant investment vehicles, have broken through the last major barrier in traditional finance.

In reality, despite price drops, institutional allocation willingness remains strong. For example, the SOL ETF and HBAR ETF have seen net inflows for five consecutive weeks; Canary XRP ETF’s total net assets have reached $355 million, and the net assets of Bitwise and Grayscale ETFs are both around $200 million. This ongoing accumulation of massive capital is a key indicator for assessing the long-term bullishness of ETFs. Analysts estimate that even at smaller scale compared to Bitcoin, altcoin ETFs could attract $1–2 billion in capital inflows by mid-2026.

Within institutional allocation strategies, the asset’s differentiated competitive advantage is also key. For example, Solana’s staking ETF offers yields as high as 7%, and XRP’s payment-focused funds could attract investors seeking diversification or passive income. Grayscale’s Head of Research, Zach Pandl, has stated that Solana ETFs could absorb at least 5% of Solana’s total token supply within the next one to two years.

However, this optimism is being strongly challenged by market giants. The world’s largest asset manager, BlackRock, maintains a highly cautious and negative attitude toward altcoin ETFs. BlackRock’s Head of Digital Assets, Robert Mitchnick, claims that most altcoins are worthless and emphasizes the risks of investing in a wide variety of immature digital assets. As such, they focus only on established cryptocurrencies like Bitcoin and Ethereum. Bloomberg ETF analyst Eric Balchunas supports this view, arguing that this stance explains why BlackRock is unwilling to diversify its portfolio.

This cautious stance brings potential risks. K33 Research states that without BlackRock’s participation, total capital inflows into altcoin ETFs could drop by 50% to 70%. Meanwhile, the CEO of CryptoQuant has warned that altcoin liquidity is falling rapidly, and only projects that can open up new liquidity channels (especially via ETFs) will survive in the market.

Additionally, the experience of the LTC spot ETF serves as a clear negative example: it has seen multiple consecutive trading days with zero net inflow since its listing. One of Europe’s largest digital asset managers, CoinShares, has also officially withdrawn its SEC applications for XRP, Solana Staking, and Litecoin ETFs, proving that even major asset managers remain cautious about single-asset ETFs with intense competition and limited profits.

CoinShares CEO Jean-Marie Mognetti stated that, given the dominance of traditional finance giants in the single-asset crypto ETF market, the company will reallocate resources over the next 12–18 months to more innovative and higher-margin products.

Conclusion

The differentiation among institutions precisely demonstrates that the era of crypto asset ETFs is entering a stage of layered allocation. On one side, Vanguard’s opening up of Bitcoin ETF trading symbolizes mainstream finance’s ultimate acceptance of the crypto market; on the other, CoinShares’ withdrawal of applications and BlackRock’s cautious stance on altcoins highlight institutional vigilance regarding underlying asset quality and sector competition.

Overall, ETF approval is, in essence and over the long term, an important bullish factor. Short-term price declines do not mean the bullish catalyst has failed—they simply reflect that the realization of the benefit has been distorted by short-term market forces.