Altcoin ETF Plans Are Being Withdrawn as Crypto Slump Saps Demand

Forecast Trend Report by Period

Interest in altcoins is dropping sharply as the digital-asset market remains weak, Bloomberg reported. As a result, a string of exchange-traded fund plans tied to altcoins that had been scheduled for launch this year have been withdrawn.

Bloomberg reported on Aug. 14 that Grayscale recently pulled plans to launch ETFs based on Cardano's ADA, Polkadot's DOT and Hedera's HBAR. Bitcoin has fallen 28% this year, while an altcoin index has dropped more than 40%. Major altcoins including Dogecoin, Solana and Cardano have each fallen about 50% from their highs.

"Even if there is some investor interest in smaller tokens, demand must be strong enough to cover the cost of launching and maintaining an ETF," Roxanna Islam, head of research at VettaFi, said. With the broader market in a downturn, there is less incentive to launch ETFs tied to smaller altcoins.

Demand for altcoins is also weakening as retail investors shift their attention to artificial intelligence-related investments, sports betting and prediction markets. "Interest in some smaller altcoins is declining," David Tawil, co-founder of ProChain Capital, said. Even when demand exists, investors selecting ETFs are likely to prefer larger, better-known asset managers.