Over 70 cryptocurrency ETFs are under review by the SEC this year, covering a variety of assets. Institutional demand for crypto is increasing, with many planning to raise their allocations by 2025. However, analyst caution suggests ETF approval doesn’t always lead to mass adoption. Altcoin ETFs might see more modest inflows compared to Bitcoin funds, but derivatives products could drive institutional interest.
The US Securities and Exchange Commission (SEC) is set to review over 70 cryptocurrency exchange-traded funds (ETFs) this year, as reported by Bloomberg analyst Eric Balchunas. These proposed ETFs encompass various assets, including altcoins, memecoins, and derivatives instruments, potentially igniting significant market interest.
In a recent post, Balchunas highlighted the diverse range of assets suggested for these ETFs, mentioning cryptocurrencies like XRP, Litecoin, and Solana, alongside more eccentric options such as Dogecoin and various thematic coins. He forecasts an exciting year ahead for the crypto ETF market.
As institutional interest in cryptocurrencies grows, more than 80% of institutions intend to boost their crypto allocations by 2025, according to a report from Coinbase and EY-Parthenon. Nonetheless, analysts warn that ETF approvals do not guarantee mass adoption, particularly for those targeting lesser-known altcoins.
Balchunas metaphorically compared being included in an ETF to a band having songs on major music streaming platforms; it increases visibility without ensuring popularity. Sygnum Bank’s Katalin Tischhauser anticipates that altcoin ETFs will generate cumulative inflows of $100 million to $1 billion, significantly less than the $100 billion attracted by Bitcoin funds last year.
Additionally, derivatives-based ETFs offering exposure to cryptocurrencies like Bitcoin and Ether could see higher institutional demand. Options contracts could enable investors to effectively strategize their portfolios, potentially driving substantial price gains for digital assets, according to Jeff Park from Bitwise Investments. On April 21, ARK Invest incorporated staked Solana (SOL) into two existing ETFs, allowing US investors access to this asset in an ETF format for the first time.
