17 January 2025

A week that reset the bears. Bitcoin is back home above $100,000 with the crypto market cap nearing $3.6 trillion. We all are now eagerly waiting for Trump’s inauguration next week which should set the next bull rally in motion soon.

Today, we analyse the two US-based altcoins that are on the verge of getting their own ETFs approved – XRP and Solana.

Let’s dive in.

Top-3 stories of the week:

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The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $3.57 trillion - UP 8.8%    

• Bitcoin price - 101,537 - UP 8.0%

• The dollar index (DXY) - 109.14 - DOWN 0.2%

• Bitcoin Dominance - 57.56% -  DOWN 0.8%

• Crypto Fear and Greed Index - 75 - Market is in Greed

THE HOT TAKE

XRP v Solana: Which will be the next spot ETF?

With Bitcoin and Ethereum ETFs already making waves and attracting billions in investment, the spotlight is now on two prominent contenders: Solana (SOL) and XRP (XRP). Both have garnered significant attention from institutional investors and the crypto community alike, but the race to secure ETF approval from the US SEC is heating up.

In today’s issue, we delve deep into this ETF race, examining the key players, timelines, and expert opinions that will determine the ultimate winner.  

Solana ETF Landscape

Solana has emerged as a strong contender in the DeFi space, boasting impressive network activity and surpassing Ethereum in certain metrics like DEX volumes. This has fuelled optimism for a Solana ETF, with several asset managers vying for US SEC approval.  

Interestingly, Blackrock, a leading asset manager with a successful Bitcoin ETF, has opted out of the Solana ETF race, at least for now. This decision, despite their peers showing interest, raises questions about their assessment of Solana's long-term prospects. Blackrock's Chief Investment Officer, Samara Cohen, stated that Solana does not currently meet their investment criteria. VanEck, a prominent player in the ETF space, predicts a "significant" chance of Solana ETF approval in 2025.

Timelines

• January 23, 2025: Deadline for Grayscale's Solana ETF application

• January 25, 2025: Preliminary decision expected for the four other applicants (VanEck, 21Shares, Bitwise, and Canary Capital)

• March 11, 2025: Second deadline for the SEC to approve or reject the Solana ETFs

Experts believe a Solana ETF approval is highly likely in 2025, with some predicting a greater than 75% chance of listing this year. A Polymarket poll shows a 53% chance of approval by July 31, 2025.  

The key uncertainty lies in the timeline and whether the SEC will require multiple iterations before granting approval, similar to the process for Bitcoin and Ethereum ETFs.

Potential Impact: A Solana ETF could provide greater accessibility for traditional investors and further solidify Solana's position in the market. Currently trading at $213, Solana faces key resistance at $220. Analysts project a short-term price target of $300, given Solana’s historical peak of $263 last November. In the long term, favourable conditions could push the price to $450 or higher, leveraging the institutional demand that has driven the success of Bitcoin’s ETFs.

Overall, analysts speculate a potential 4x surge this year if the SOL ETF is approved, further solidifying Solana's position in the market.

XRP ETF Landscape

XRP, the crypto associated with Ripple, has also witnessed a surge in interest and investment. Ripple's partial legal victory against the SEC, clarifying that XRP is not a security in certain circumstances, has further strengthened its ecosystem and boosted optimism for a XRP ETF.

Key Developments

• Bitwise Asset Management: First to file for a spot XRP ETF in October 2024.

• Canary Capital, 21Shares, and WisdomTree: Joined the XRP ETF race with their own applications.

• Garlinghouse (CEO of Ripple) has hinted at a possible partnership with BlackRock to launch an XRP ETF in the US

Timelines

• January 15, 2025: Deadline for the SEC to appeal in the Ripple lawsuit. SEC has filed opening brief in its appeal against Ripple over XRP, yesterday.

• January 16, 2025: Deadline for the SEC to respond to WisdomTree's XRP ETF application. No official verdict is out yet.

• No set deadlines: For the other XRP ETF applications from Bitwise, Canary Capital, and 21Shares.

An XRP ETF could attract significant institutional investment and further solidify XRP's position in the global financial system. The SEC's appeal and the ongoing legal battle with Ripple create some uncertainty regarding the timeline and outcome of XRP ETF applications.  

Investment inflows into XRP-focused products surged to $438 million in 2024, a 2,433% increase compared to 2023, making XRP the third-largest altcoin in terms of ETP capital flows.

Potential Impact

The approval of a spot XRP ETF could act as a major catalyst for the token’s price, unlocking new levels of institutional investment and market adoption, thanks to the success from its RLUSD stable coin flows. Drawing comparisons from Bitcoin's rally following its ETF approval, XRP could see its price surge to approximately $4.6 from its current levels.

Who will get the ETF first?

The race between XRP and Solana is heating up (Litecoin and Hedera could also become wildcard entries), with Solana currently leading due to its earlier 19b-4 filings by major ETF issuers like Bitwise and VanEck.

XRP, while promising, faces greater regulatory scrutiny due to its historical battles with the SEC, which could delay its approval. Ultimately, the first to get the ETF will depend on how quickly the SEC processes each application under its new leadership, but our analysis suggest that Solana is the most likely to secure approval ahead of XRP.

What does it mean for you, the investor?

Play the market – which ever coin gets closer to a ETF approval, invest in it for the short to medium term to get good exposure. XRP and SOL are both good projects but SOL has demonstrated more adoption recently and, hence, is our pick out of the two.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.