(Bloomberg) -- Among those celebrating Donald Trump’s return to the White House: Members of the alternative cryptocurrency universe whose once-improbable ETF ambitions now suddenly look more hopeful.
In contrast to the Biden administration, Trump has embraced digital assets. The president-elect’s enthusiasm for the industry has bolstered Wall Street’s plans to get crypto exchange-traded funds approved.
This year, the US Securities and Exchange Commission received a handful of applications for funds tracking all types of crypto like Solana, the world’s fourth-largest digital token; XRP, the world’s seventh-largest; and Litecoin, a much smaller coin. The slew of filings is indicative of an industrywide push to open the asset class to the masses.
“These altcoin ETFs were going to be pretty much dead-on-arrival if Harris won but with Trump they at least have a fighting chance,” said Eric Balchunas, senior ETF analyst at Bloomberg Intelligence. “We are not saying it’s a done deal, but the hurdle is lower.”
Since the debut of ETFs that hold Bitcoin and Ether earlier this year, the cohort of Bitcoin funds have amassed more than $24 billion in net inflows, while the Ether group had around $500 million in outflows.
To Noelle Acheson, author of the Crypto Is Macro Now newsletter, Solana ETFs have the most likelihood of getting approved since they have the highest level of institutional investor interest given the token’s clearer narrative.
“Solana is seen as an Ethereum competitor, and has very much outperformed recently,” she said. “The problem with XRP is that people struggle to understand what it is.”
Bitcoin, viewed by many as a so-called Trump trade, hit a new high, while smaller tokens also advanced higher. BlackRock Inc.’s Bitcoin ETF saw $4.1 billion in traded value Wednesday — its most on record.
The gain is not a so-called sell the news event, according to Bernstein analysts led by Gautam Chhugani. Regulatory tailwinds under a Trump presidency are “far from being priced in,” they added, predicting a $200,000 price target for Bitcoin by the end of 2025.
During his presidential campaign, Trump fully transitioned to crypto cheerleader from skeptic, vowing to fire and replace SEC Chair Gary Gensler with regulators who love digital assets.
Even so, how much of an influence Trump will have on the SEC, an independent government regulatory agency, remains to be seen, said Stephane Ouellette, co-founder and chief executive officer of FRNT Financial.
“While they may be more friendly on the crypto industry with a new chief, the SEC are a massive bureaucracy that’s hard to predict,” he said. “The biggest take away from a Trump win is likely for startups and companies in the crypto space that will feel more comfortable building without legal retribution.”
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