Billions of dollars in market value has vanished as altcoins plunged, exposing just how illiquid and unstable many of these assets remain. Some tokens are down 70% over the past week, with bids disappearing as liquidity thinned. It’s a brutal reminder that large swaths of the digital asset world still resemble a financial wild west — even as product engineers race to repackage them for regulated markets.
Roughly 130 ETF applications linked to smaller cryptocurrencies are now pending with the US Securities and Exchange Commission, data compiled by Bloomberg Intelligence show, including funds tied to Polkadot, Chainlink, and Pengu — the memecoin affiliated with Pudgy Penguins. Dogecoin — created as a joke in 2013 — already has a live ETF trading under the ticker DOJE, which has pulled in $38 million in inflows. But in wake of the selloff, no one’s laughing.
The recent crypto slump is far from the chaos of the 2022 digitalasset crisis, but it is still raising red flags. Fresh worries over stresses in the credit market renewed a decline in prices on Friday, with an index of altcoins dropping as much as 11% to its lowest since April. It all serves as another stark reminder of how swiftly an entire ecosystem of speculative tokens could be vaporised. Many of the filings were submitted months ago during a stretch of bullish sentiment, with issuers betting that retail appetite for risk would persist. But the crash has complicated that pitch. For all the polish of the ETF wrapper, the underlying assets remain highly speculative — and structurally dependent on fast-money flows, retail churn and viral momentum. Whether those forces can be replicated in a fund format is still untested.
The timing has also sharpened concerns about the disconnect between regulatory approvals and investor protection. As the SEC weighs whether to greenlight more altcoin ETFs, the backdrop is one of steep losses for retail traders — many of whom were drawn in by speculative fervor only to see their holdings decline.