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Author: Dami-Defi; Source: X, @DamiDefi; Compiler: AididiaoJP
Bloomberg predicts that more than 200 crypto ETFs will be launched in the future, following the Bitcoin and Ethereum ETFs.Will altcoins gain the same popularity, or will they face more volatility?Let’s dig deeper:
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historical background
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DATs: Collateral Risk and MNAV Watch
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Bullish and bearish reasons for altcoin ETFs
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How did we get here?key catalyst
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Macro Impact: $300 Billion Stablecoin Liquidity Will Drive DeFi Bull Market
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reverse signal
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What to look out for during ETF launch
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Three high-impact ETFs to watch
historical background
The crypto ETF space has changed dramatically since the first ETFs were launched.Total net assets of U.S. spot Bitcoin ETFs have exceeded $146 billion, cementing Bitcoin’s dominance with a 59% share of the crypto market.The Ethereum ETF is in second place, holding about $25 billion in assets.Cumulative net inflows into spot Bitcoin ETFs have now exceeded $50 billion, and the market continues to see daily inflows.
Before the advent of crypto ETFs, traditional finance held exposure to digital assets through the likes of GBTC and MSTR.This approach has given rise to Digital Asset Treasury companies (DATs), which accumulate specific altcoins such as ETH, SOL, XRP, etc. so that investors can gain exposure through equities.DATs are the bridge between the pre-ETF era and today’s pending altcoin ETFs, and they are where the risks arise.
DATs: Collateral Risk and MNAV Watch
The market cap to net asset value multiple (MNAV) is important because it shows how easily a DAT can raise capital.When the multiple is above 1, debt is easily available and more tokens can be purchased.If it stays below 1 for a sustained period, funding dries up and reserve sales become a real risk.
Please pay close attention to the MNAV and premium of the top DATs, PIPE unlock dates, liquidity, and any balance sheets in 10-Q statements or operating updates.Pressure can also spread; troubles in a small DAT can affect larger DATs, or questions asked at the top can have a ripple effect downwards.
Bullish and bearish reasons for altcoin ETFs
Bullish case
The rise of altcoin ETFs could soon provide a major liquidity boost to the market.Take the ProShares CoinDesk 20 ETF, for example; it includes some great assets like HBAR, ICP, XRP, and SOL.In total, there are 155 ETPs tracking 35 cryptocurrencies awaiting approval.The influx of liquidity into these ETFs will drive up the prices of related altcoins, extending the rally of the Bitcoin and Ethereum ETFs.
Additionally, ETF inflows have driven market focus on the underlying token, prompting some allocators to purchase higher beta DATs.DATs subsequently raise funds and accumulate more tokens, which may further strengthen the altcoin narrative.What’s more important is that issuers like BlackRock, Fidelity, VanEck and Grayscale provide a trusted gateway.This could potentially unlock larger, more stable investments than could be accessed through exchanges alone.
Bearish case
Altcoins on the other hand have struggled to regain their usual bullish hype, and this weak demand could limit their performance.The CoinDesk 20 index highlights the problem: BTC and ETH dominate with weights of 29% and 22%, while altcoins like ICP and FIL only account for 0.2% of the basket.This concentration means more funds will flow to mainstream currencies, benefiting them more.
Additionally, if funds were to move from DAT stock to altcoin ETFs, DAT’s net asset value (MNAV) could drop below 1, causing funds to dry up.This could force the sale of reserves, creating direct selling pressure on those altcoins.
Microstructure at launch: Even with a medium-term bullish outlook, expect 24-72 hours of “all the good comes out of the bad” swings around the time an ETF launches.
How did we get here?key catalyst
The growing interest in altcoin ETFs is driven by a combination of factors:
On September 17, the U.S. Securities and Exchange Commission (SEC) introduced the “Common Listing Standards for Commodity Trust Units.”The standard shortens the approval time for new ETFs and makes the process more predictable.Thanks to the SEC’s Common Listing Standards, we may see multiple ETFs approved in the short term when governments reopen.
Earlier, in July, the SEC allowed physical redemptions for non-Bitcoin crypto ETFs, bringing them in line with traditional commodity ETFs.It reduces liquidity friction and attracts more institutional funds.
The success of Bitcoin and Ethereum spot ETFs is also driving wider adoption, with 59% of institutions allocating more than 10% of their portfolios to digital assets by mid-2025.
Rule of thumb (strict criteria): ISG-regulated spot trading venue, or at least six months of regulated futures trading with data sharing, or tracking above 40% among existing listed ETFs.This clears the way for many major and mid-cap tokens up front.
Macro Impact: $300 Billion Stablecoin Liquidity Will Drive DeFi Bull Market
As of October 2025, there is nearly $300 billion in stablecoin liquidity in circulation globally.This vast infrastructure sets the stage for ETF-driven capital catalysts, bringing institutional money into the DeFi ecosystem and amplifying returns.
Synergies between the $300 billion in stablecoin liquidity and expected altcoin ETF inflows could create a multiplier effect.The inflow-to-market cap multiplier observed in Bitcoin ETFs, for example, suggests that every $1 of ETF capital may inflate market cap by several dollars.If altcoin ETFs gain traction, this could unlock tens of billions of dollars, pushing total crypto market cap to new highs by the end of 2025.
As regulatory clarity increases under Trump-era policies, the influx of institutional capital could give DeFi protocols a big boost, especially those integrating assets like LINK and HBAR that bridge traditional finance and blockchain, or staking ETFs like REX-Osprey’s filing for altcoins like TAO, INJ, and more.
Additionally, against a backdrop of a weaker dollar and risk assets near all-time highs, ETFs offer institutions a convenient path to rotate along the risk curve from BTC to large-cap altcoins and then to mid-caps and DeFi.
Multiplier warning: The impact of inflows on valuations relies on continued net creation and healthy funding basis.DAT pressure (MNAV < 1 or unlock event) may temporarily suppress the multiplier.
reverse signal
Ever the contrarian, Jim Cramer recently urged investors to dump cryptocurrencies and jump into stocks.Given his track record of being wrong at key turning points, I think now is the time to be more committed to holding crypto assets.
Concerns that ETFs will cannibalize DATs and trigger liquidation sit alongside unprecedentedly strong market access and clarity, ETF pipelines and approval queues.This mismatch could constitute a bullish pattern if first-week inflows remain strong.Historically high concerns about DAT pressures have coexisted with improving market access, often marking an accumulation phase rather than a market top.
What to look out for during ETF launch
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Days 0-3: Anticipate front-running and the risk of “all the good turns out to be bad.”Pay attention to the net creation volume and redemption volume and the bid-ask spread displayed on the screen.
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Weeks 1-4: If net inflows remain strong and spot prices remain consistent with perpetual contract prices, the dip bias may persist.
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Rotation Signal: Higher weekly highs/lows for other coins relative to BTC suggests that altcoin demand is expanding.If this signal fails to appear, it will tend to maintain a heavy position in BTC.
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Cross-asset clue: DAT premiums improve as ETF inflows create a positive feedback loop.
Three high-impact ETFs to watch
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Solana: SOL is the altcoin with the strongest conviction that stands to benefit from diversification, outside of BTC and ETH ETFs.Of the 155 crypto ETFs awaiting approval, 23 target Solana.This sign of strong institutional demand shows where funds may be flowing.That’s why the ETF tracking SOL is one of the most important ETFs to watch and could potentially deliver huge investment returns.
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ProShares CoinDesk 20 ETF: Tracks 20 top cryptocurrencies, including BTC, ETH, and altcoins like XRP, which can diversify institutional exposure.
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REX-Osprey 21-Asset ETF: Designed to provide exposure to specific cryptocurrencies and provide staking capabilities for tokens like ADA, AVAX, DOT, NEAR, SEI, SUI, TAO, and HYPE.
The fourth quarter may quickly be dominated by the ETF narrative, boosting related areas such as DeFi.Regardless of whether altcoins can capture the same demand as BTC, the momentum is undeniable.Stay confident and position yourself for the upcoming altcoin ETF narrative.
