Crypto ETF Performance: A Closer Look at DOGE, XRP, and SOL

Crypto ETF Performance: A Closer Look at DOGE, XRP, and SOL

The recent months have seen the launch of a series of Exchange Traded Funds (ETFs) focused on emerging cryptocurrencies like DOGE, XRP, Solana (SOL), Litecoin (LTC), Hedera (HBAR), and Chainlink (LINK). Contrary to widespread anticipation, the price of these assets has not significantly appreciated following the advent of their respective ETFs.

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

Between late October and November, there was a flurry of new ETF listings. However, SoSoValue data reveals that continued fund inflows have not aligned with price increases. Examples include:

• Solana (SOL): Since its launch in late October, the SOL ETF has recorded positive net inflows for four consecutive weeks, with total net assets currently standing at $918 million. However, the spot price of SOL has dropped from approximately $184 on October 31 to around $143, a decrease of over 20%.
• XRP: The first XRP ETF launched on November 13, registering a trading volume of $59.22 million on its first day. Subsequently, continuous net inflows began. However, the XRP spot price has fallen by over 20% from $2.38 on November 13 and currently maintains a level of around $2.2.
• HBAR: After its launch on October 28, the HBAR ETF has recorded net inflows for five consecutive weeks, with total net assets reaching $65.49 million. However, the HBAR spot price has decreased by nearly 20%.
• DOGE: The DOGE ETF did not experience any net inflows on its launch day on November 24, with a trading volume of $1.41 million. The current total net assets for the two listed DOGE spot ETFs stand at $6.48 million, and the DOGE price has not seen significant changes.
• LTC: The LTC spot ETF launched on November 5, with a cumulative total net inflow of $7.26 million. However, there have been multiple instances of single-day net inflows of zero over the past month. As a result, the LTC price has decreased by approximately 14% since the Canary LTC spot ETF was launched on October 28.

Except for the Litecoin ETF, the other coin ETFs have experienced sustained inflows, but the underlying asset prices have either fallen or remained stagnant. This decoupling can be attributed to a combination of macroeconomic factors and speculative behavior. Firstly, it is crucial to acknowledge that the overall cryptocurrency market environment during the ETF approval period was not characterized by bullish sentiment. This was embodied in the performance of core assets: Bitcoin ETFs saw net outflows of $3.48 billion in November, while Ethereum ETFs saw net outflows of $1.42 billion. The massive outflows from core assets created strong overall negative sentiment and macroeconomic headwinds, overshadowing the incremental positive effects of emerging ETFs. In this environment, the "buy the expectation, sell the fact" behavior led speculators to collectively sell their holdings for profit when the good news materialized, resulting in short-term selling pressure. Secondly, during market downturns, the selling sentiment of altcoins with relatively lower liquidity was amplified. Compared to Bitcoin, XRP, SOL, and other coins have shallower market depth, limiting their ability to absorb selling pressure. Simultaneously, the current speed of inflows is relatively slow, with institutions still in a period of observation. Their gradual allocation pace cannot immediately offset the pressure from wholesale selling by whales and speculators. In summary, the decoupling between ETF inflows and asset prices in the short term is a result of speculative cleansing, macroeconomic headwinds, and the lagged pace of institutional fund deployment. However, this does not mean that the good news is invalid; rather, it is a reminder for investors to evaluate the value of ETFs from a long-term perspective and institutional allocation structures.

2. Long-Term Value: Institutional Allocation and Sustained Funding Inflows

Since short-term price performance is influenced by external factors, the value of ETFs should be examined through two core dimensions: the persistence of institutional inflows and a differentiated competitive advantage of the assets themselves. This shift in attitudes is first evident in the shift in attitude by traditional financial players. Vanguard Group, one of the world's largest asset management firms, which has historically been conservative about crypto assets, announced the opening of Bitcoin ETF trading. For years, their leaders have argued that cryptocurrencies lack intrinsic value: they neither generate cash flow nor suit long-term retirement strategies. They viewed digital assets as speculative tools rather than core investment portfolio components. The company rejected Bitcoin ETF offerings after their launch in January 2024, even restricting clients from purchasing competitor funds. However, Vanguard is now allowing investors to trade BlackRock's Bitcoin spot ETF, signaling a shift from critics to distributors. This move undoubtedly signals that ETFs, as compliant investment tools, have finally broken the last major barrier in the traditional financial world. Despite price downturns, institutions have remained committed to asset allocation. For example, SOL ETFs and HBAR ETFs have experienced net inflows for five consecutive weeks; the Canary XRP ETF has total net assets of $355 million, and Bitwise and Grayscale ETFs have net assets of approximately $200 million million. This sustained and massive accumulation of capital is a crucial gauge of the long-term benefits of ETFs. Analysts estimate that even if altcoin ETFs are smaller in scale compared to Bitcoin, they could still bring in inflows of $10 billion to $20 billion by mid-2026. In institutional allocation strategies, the differentiated competitive advantage of assets is critical. For example, Solana’s staking ETFs provide yields of up to 7%, XRP's payment-type funds, etc., which may attract specific interest from investors seeking investment diversification or passive income. Zach Pandl, head of research at Grayscale, stated that Solana ETFs could absorb at least 5% of the total supply of Solana tokens in the next year or two. However, this optimism is being strongly challenged by market giants. BlackRock, the world's largest asset manager, is adopting a highly cautious and negative stance toward altcoin ETFs. Robert Mitchnick, head of digital assets at BlackRock, stated that most altcoins are worthless and emphasized the risks of investing in a diverse range of immature digital assets, so they are focusing on established cryptocurrencies such as Bitcoin and Ethereum. Bloomberg ETF analyst Eric Balchunas supports this view, believing that this stance explains why BlackRock is reluctant to diversify its investment portfolio. This cautious stance poses potential risks. K33 Research indicates that without BlackRock's participation, the total funds flowing into altcoin ETFs could decrease by 50% to 70%. At the same time, the CEO of CryptoQuant warned that altcoin liquidity is rapidly dwindling, and only plans that can open new liquidity channels (especially through ETFs) will survive in the market. In addition, the fate of the LTC spot ETF is the most obvious counter-example, with it recording zero single-day net inflows for several consecutive business days since its launch. CoinShares, one of Europe's largest digital asset management companies, has officially withdrawn its applications to the SEC for XRP, Solana Staking, and Litecoin ETFs, demonstrating that even large asset management companies are wary of single-asset ETFs that are competitive and have limited profit potential. CoinShares CEO Jean-Marie Mognetti stated that given the dominance of traditional financial players in the single-asset crypto ETF market, the company will reallocate resources to more innovative and profitable products in the next 12-18 months.

Conclusion

Institutional divergence precisely indicates that the ETF era for crypto assets is entering a tiered allocation phase. On one hand, Vanguard Group's opening of Bitcoin ETF trading represents the final acceptance of the crypto market by mainstream finance. On the other hand, CoinShares' withdrawal of applications and BlackRock's cautious attitude toward altcoins show that institutions are wary of the quality of underlying assets and track competition. Overall, obtaining approval for ETFs is undoubtedly a significant piece of good news in essence and in the long term, and the short-term decline in asset prices does not mean that the good news is invalid, but rather that the method of realization is distorted by short-term market forces.