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"Dozens of altcoin ETFs are about to be approved, and everyone’s hyped about how much they could pump their favourite cryptos. But what if we told you that these ETFs could actually crash the very altcoins they’re meant to help?
That’s because investors could start selling shares in the treasury companies that hold large reserves of these altcoins to buy into the new ETFs instead. That selling pressure could force those treasury companies to dump their altcoin reserves, triggering a ripple effect across the market.
Today, we take a close look at this possibility, tell you which altcoins could be affected, and what’s likely to happen after the altcoin ETFs launch."
~ Coin Bureau
This is a fascinating breakdown of the potential trade-offs between altcoin ETFs driving new investment and the potential liquidation pressure on existing altcoin treasury companies.
The video discusses the imminent approval of dozens of spot altcoin ETFs and the dual impact they could have on the crypto market. While many believe the ETFs will be a significant bullish catalyst, driving new capital from traditional finance investors and sparking an alt season, there is a risk that they could backfire by diverting liquidity from existing Digital Asset Treasury (DAT) companies. These DATs, such as those holding Ethereum or Solana, currently allow TradFi investors to gain crypto exposure through their stock. If investors sell their shares in DATs to purchase the new, more trusted ETF shares, the DATs' stocks could trade at a multiple of net asset value (MNAV) below one. This financial pressure could force the DAT companies to liquidate their altcoin reserves to maintain solvency, creating massive selling pressure and potentially crashing the prices of coins like Ethereum and Solana, which are currently heavily held by these treasury firms.
However, the video also offers a bullish perspective, noting that the approval of the altcoin ETFs, coupled with a supportive macroeconomic environment and specific altcoin catalysts, could lead to large inflows. The approvals themselves could act as a catalyst, drawing attention and investment to the respective altcoins. It is also possible that the ETFs and DATs could be mutually beneficial, as investors might choose to diversify across both the lower-risk ETF and the higher-risk DAT, leading to a positive feedback loop of ever-increasing attention and investment in the altcoin ecosystem. This outcome would mirror what has historically been observed in other asset classes, where capital moves along the risk curve and benefits related assets rather than draining liquidity from them entirely.
0:00 Intro
1:04 Why Crypto Treasuries Are So Popular
3:10 Spot Altcoin ETFs Pending Approval
6:49 Could Spot Altcoin ETFs Drain Liquidity From Altcoin Treasuries?
10:07 Which Altcoins Could Be Most Affected?
12:23 How Altcoin ETFs Could Bring Attention To Altcoin Treasuries
Source - Coin Bureau YouTube: https://www.youtube.com/watch?v=G8iQ4Ty4rKw
Disclaimer: This video is provided for informational purposes only, and not offered or intended to be used as legal, tax, investment, financial, or any other advice.
