The recent adjustments by the Securities and Exchange Commission (SEC) regarding exchange-traded funds (ETFs) are creating waves in the cryptocurrency market, with expectations that inflows for these financial instruments could surpass those seen in 2024. Investors are keenly watching the potential emergence of ETFs for popular cryptocurrencies like XRP and Solana, which have stirred significant excitement in the market.
Despite a recent downturn, market experts remain optimistic about a bullish fourth quarter for cryptocurrencies. James Butterfill, head of research at CoinShares, suggested that the initial muted reaction to the Federal Reserve’s interest rate cut will likely be short-lived. He noted, “While the immediate response to looser monetary policy hasn’t been positive due to an unwinding of leverage, digital assets will garner support in the coming months.” Butterfill identified cooling inflation and a more dovish approach from the Federal Reserve as crucial drivers that could push Bitcoin to a remarkable $168,000 by year-end.
This sentiment is echoed by various market analysts. Shawn Young, chief analyst at MEXC, forecasting Bitcoin reaching $135,000, while others from Standard Chartered and Bernstein predict the leading cryptocurrency could soar past $200,000 by 2026. However, recent market performances have told a different story. Over the past week, Bitcoin has dropped 6% and is trading around $109,600, while Ethereum has faced a 12% decline to approximately $3,900. The broader cryptocurrency market has experienced a slight decrease, losing about 1% of its total value, now resting at approximately $3.8 trillion.
Despite these fluctuations, the SEC’s rapid actions to facilitate the launch of more crypto ETFs signal a shift in the regulatory landscape. On September 17, the agency implemented a new generic listing standard, drastically reducing the approval timeframe from 240 to just 75 days. James Seyffart, an ETF expert from Bloomberg Intelligence, estimated that these updated guidelines could enable the launch of over one hundred crypto ETFs within the next year.
Butterfill emphasized the positive implications of the SEC’s new rules, indicating that this could catalyze a significant increase in inflows for the exchange-traded product sector. Last year, ETPs attracted over $48 billion, and despite currently standing at $40 billion, Butterfill projects that following the SEC changes, inflows could reach up to $60 billion for the full year. As the year progresses, the combination of relaxed monetary policy and the growing buzz around potential XRP and Solana ETF launches in the United States is likely to invigorate the market significantly.
