Wall Street’s altcoin ETF hopes fade after crypto crash hits hard
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Wall Street’s rush to capitalize on the altcoin boom has hit a wall after last week’s market crash erased billions in value from smaller digital assets, leaving dozens of pending ETF applications hanging in uncertainty.
Altcoins — smaller, often thinly traded tokens — have plunged as much as 70% in the past week, exposing severe liquidity issues and rattling confidence among issuers and investors. The MarketVector Digital Assets 100 Small-Cap Index, which tracks some of the least liquid cryptocurrencies, fell 11% on Friday to its lowest level since April.
Before the downturn, financial firms had submitted about 130 ETF applications tied to niche cryptocurrencies, including Polkadot, Chainlink, and Pengu - a memecoin affiliated with the Pudgy Penguins NFT project. The filings were made during a period of bullish sentiment earlier this year, as issuers sought to tap into retail demand for speculative tokens.
Dogecoin, originally created as a joke, already trades through a live ETF under the ticker DOJE, which has attracted around $38 million in inflows. However, following the crash, investor enthusiasm has sharply faded, and liquidity across many altcoin markets has dried up.
The downturn has intensified scrutiny of the Securities and Exchange Commission’s pending reviews, particularly over whether such products could amplify risks for retail traders. Many tokens tied to proposed ETFs are structurally dependent on retail trading momentum and social media-driven hype, raising doubts about their long-term viability inside regulated fund structures.
Ilan Solot, senior global market strategist at Marex Solutions, said the sell-off has underlined the structural weaknesses of many altcoins.
Before the downturn, financial firms had submitted about 130 ETF applications tied to niche cryptocurrencies, including Polkadot, Chainlink, and Pengu - a memecoin affiliated with the Pudgy Penguins NFT project. The filings were made during a period of bullish sentiment earlier this year, as issuers sought to tap into retail demand for speculative tokens.
Dogecoin, originally created as a joke, already trades through a live ETF under the ticker DOJE, which has attracted around $38 million in inflows. However, following the crash, investor enthusiasm has sharply faded, and liquidity across many altcoin markets has dried up.
The downturn has intensified scrutiny of the Securities and Exchange Commission’s pending reviews, particularly over whether such products could amplify risks for retail traders. Many tokens tied to proposed ETFs are structurally dependent on retail trading momentum and social media-driven hype, raising doubts about their long-term viability inside regulated fund structures.
Ilan Solot, senior global market strategist at Marex Solutions, said the sell-off has underlined the structural weaknesses of many altcoins.
We saw this carnival of new filings and many providers thought it was party time. After the blow up, it will be even harder. There are thousands of ETFs that launched that get no longevity. I suspect few of these will have meaningful inflows,
The regulatory backdrop adds further uncertainty. The SEC has been shuttered for over a week amid the ongoing government shutdown, delaying progress on ETF reviews. Under the current administration, however, issuers have been emboldened to file for riskier products, including double-leveraged funds tied to Trump and Melania cryptocurrencies.
Jane Edmondson, head of index product strategy at TMX VettaFi, noted that issuers are taking advantage of a permissive regulatory climate.
Jane Edmondson, head of index product strategy at TMX VettaFi, noted that issuers are taking advantage of a permissive regulatory climate.
While predicting altcoin winners is difficult, issuers are taking advantage of the more favorable environment for crypto products and staking their claim
Despite the turmoil, some analysts argue that regulated ETFs could still bring greater transparency and investor protections to the altcoin space by replacing offshore exchanges and leveraged derivatives with standardized disclosures and custody frameworks.
The coming months will test whether that vision holds. For now, the altcoin ETF boom that once promised to bring Wall Street polish to crypto’s riskiest assets has been put on pause — awaiting both market stability and regulatory clarity.
GNcrypto previously reported on the sharp market downturn following President Trump’s 100% tariff announcement on Chinese trade, which triggered widespread liquidations across crypto markets and erased nearly $20 billion in leveraged positions within a day. The current trading environment remains tense, with traders watching policy updates closely after the selloff that pushed Bitcoin below $105,000 and caused heavy losses across altcoins.
The coming months will test whether that vision holds. For now, the altcoin ETF boom that once promised to bring Wall Street polish to crypto’s riskiest assets has been put on pause — awaiting both market stability and regulatory clarity.
GNcrypto previously reported on the sharp market downturn following President Trump’s 100% tariff announcement on Chinese trade, which triggered widespread liquidations across crypto markets and erased nearly $20 billion in leveraged positions within a day. The current trading environment remains tense, with traders watching policy updates closely after the selloff that pushed Bitcoin below $105,000 and caused heavy losses across altcoins.
Author
Sebile Fane cut her teeth in blockchain by building tiny NFT experiments with friends in her living room, long before the buzzwords took hold. She’s driven by a curiosity for the human stories behind smart contracts — whether it’s a small-town artist minting her first token or a DAO voting on climate grants — and weaves technical insight with genuine empathy.
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