More than 70 cryptocurrency ETFs await SEC review this year, as institutional investors show increasing interest in crypto. While funds holding Bitcoin attracted substantial assets in the past, altcoin ETFs may see limited inflows. However, ETFs using options could gain traction, enhancing portfolio strategies for investors. Recently, ARK Invest added staked Solana to its ETFs, providing new opportunities for US investors.
This year, over 70 cryptocurrency exchange-traded funds (ETFs) are under review by the US Securities and Exchange Commission (SEC). Bloomberg analyst Eric Balchunas highlighted that these proposed ETFs will encompass a diversity of assets, including altcoins, memecoins, and derivatives instruments. Balchunas remarked on social media that the diversity includes popular cryptocurrencies such as XRP, Litecoin, Solana, and various lesser-known tokens, suggesting an eventful year ahead.
Increasingly, institutional investors are expressing bullish sentiments towards cryptocurrency as an asset class. A recent report from Coinbase and EY-Parthenon noted that over 80% of institutions plan to boost their crypto allocations by 2025. Despite anticipated approvals for numerous ETFs, analysts caution against assuming they will achieve widespread adoption, particularly those focusing on obscure alternative cryptocurrencies.
Approval for ETFs does not guarantee popularity or high demand. Balchunas likened the process of a cryptocurrency becoming ETF-compatible to a band featuring its music on streaming platforms. While it enhances visibility, it does not ensure consistent listener engagement. Katalin Tischhauser from Sygnum Bank anticipates that altcoin ETFs could amass significant inflows, although they may fall short compared to the popularity of spot Bitcoin funds.
Funds centred on Bitcoin, the first cryptocurrency listed in a US ETF, reportedly attracted over $100 billion in net assets last year. Meanwhile, ETFs utilizing options and derivatives to create structured exposure to cryptocurrencies may witness stronger institutional interest. Jeff Park from Bitwise Investments noted that options provide various portfolio strategies and could significantly elevate prices for digital assets such as Bitcoin.
Recently, ARK Invest incorporated staked Solana (SOL) into two of its existing ETFs. This addition marks a milestone as it represents the first occasion that spot SOL has been accessible to US investors through an ETF.
