Solana ETFs set to attract inflows, smaller altcoin funds could 'fade into irrelevance': K33

Solana (SOL) exchange-traded funds (ETFs) could see strong demand upon launch, while other altcoin ETFs may face weaker inflows amid BlackRock's absence from the market, according to K33.

Solana could lead the altcoin ETF wave amid BlackRock's sit out

Spot SOL ETFs are expected to attract robust inflows, supported by clear signs of investor appetite, according to K33 analysts led by Vetle Lunde in a report on Tuesday.

The analysts highlight that the potential for Solana fund inflows is evidenced by sustained demand for VolatilityShares' 2x leveraged long SOL ETF, which currently has about 2.28 million SOL in equivalent exposure.

Meanwhile, other issuers are preparing to roll out more altcoin ETFs, with Canary products tied to Litecoin (LTC) and Hedera (HBAR) hitting the market on Tuesday.

On their first day of trading, Bitwise Solana ETF (BSOL) saw $56 million, while Canary's HBAR and Litecoin funds recorded $8 million and $1 million in net inflows, respectively, according to Bloomberg analyst Eric Balchunas in an X post.

https://x.com/EricBalchunas/status/1983264920935510195

Lunde cautions that these smaller and more obscure altcoin ETFs may struggle to attract meaningful attention in an increasingly crowded market. "We expect varying demand across the ETFs," the analyst wrote, adding that several altcoin funds could "fade into irrelevance in competition with dozens of other altcoin ETF launches."

The report noted that the looming "altcoin ETF frenzy" will unfold without the participation of BlackRock, the dominant force in US crypto ETF flows. The asset manager continues to adopt a conservative approach, prioritizing its Bitcoin and Ethereum products IBIT and ETHA. 

While this absence may create space for smaller issuers to capture a larger share of investor inflows, it could also limit overall net demand for altcoin ETFs, considering BlackRock's outsized influence on the US crypto ETF space.

As of late October, US Bitcoin ETFs have recorded net inflows of $26.86 billion in 2025. Without BlackRock's IBIT, the funds would collectively show net outflows of $1.27 billion.

The analysts further noted that BlackRock's absence from the altcoin ETF lineup could translate to weaker overall inflows compared to the strong demand seen for Bitcoin and Ethereum products. Without the backing of the industry's most influential issuer, altcoin ETFs may struggle to capture the same level of institutional confidence and liquidity depth.

However, this gap also opens the door for other asset managers to step up and establish themselves as credible alternatives, potentially attracting investors seeking diversified exposure beyond Bitcoin and Ethereum, the report notes. If these issuers can deliver competitive liquidity and transparent structures, they may emerge as leading players in the next phase of crypto ETF growth.

Grayscale's planned Litecoin trust is also expected to launch in the coming weeks, with K33 earlier predicting a short bias for LTC funds due to Grayscale's overhang dynamics.

Solana trades around $195 at the time of publication on Tuesday, down over 2% in the past 24 hours.