The digital asset market is on the brink of a major transformation, marked by the impending arrival of a plethora of exchange-traded funds (ETFs). One prediction by James Seifert, senior research analyst at Bloomberg Intelligence, suggests that “over 100 crypto ETFs will be launched in the coming months.”
Seifert was one of the analysts who predicted that a Bitcoin (BTC) ETF would likely be approved in January 2024. Displaying an ever-expanding panorama For financial products based on cryptocurrencies.
At the same time, it also says that it is constantly monitoring existing requests. “I track 150 products that have been introduced but have not yet been launched.”
The analyst explains: This figure includes a variety of products beyond simple spot ETFs. “Some of the products are leveraged products, so we don’t know if they’ll count or not. But we’re talking about 35 different assets in a basket of products that all these ETFs track. So there are a lot of uses available. Some are going to be more pressing than others.”
This wave of launches corresponds to normal trends in the financial sector. “The important thing is, as is often the case in the ETF industry, ETFs launch and then see what works,” the expert said, highlighting a market strategy in which investment firms offer multiple options to gauge investor appetite.
Integration of cryptocurrencies in traditional markets
Despite the optimism shown by the number of launches, Seifert warns that consolidation is inevitable with this rapid expansion. The analyst was referring to the controversy that arose after the approval of the Spot Bitcoin ETF.
But Seifert cautioned, “I don’t know if you can sustain 10 different products for the fourth or fifth largest digital asset on the market,” pointing to similarities with traditional financial products. “It’s a bit like the S&P case. There are nine viable stocks in the S&P 500 ETF, but three will take all your money.”
Currently, there are already ETFs on the market based on assets such as Litecoin (LTC), Hedera (HBAR), Solana (SOL), XRP, and most recently Dogecoin (DOGE), which have been added to the Bitcoin and Ether funds, as reported by CriptoNoticias.
Proposals from companies such as XRP’s Franklin Templeton and Chainlink’s LINK’s Grayscale are expected to be approved soon, as seen in the image below.
In addition to the aforementioned launches, there are also proposals for financial products based on other digital assets such as Avalanche (AVAX), Stellar (XLM), BNB, Sui (SUI) and Cardano (ADA).
Future predictions for the virtual currency ETF market
Eric Balciunas, Seifert’s colleague at Bloomberg Intelligence, complemented the vision by pointing out that his prediction of 100 crypto ETF launches also includes products structured under the Investment Company Act of 1940.
This means we’re counting not just spot ETFs, but also all leveraged and inverse ETFs that are scheduled to be registered under the 1940 Act, which allow investors to earn (or lose) double the return on their underlying assets.
Like Bitcoin funds, Seifert concluded that the viability of these new ETFs will depend on whether the underlying assets “perform well enough to achieve sufficient capital inflows to almost certainly deliver a return in terms of returns and perhaps even net margin.”
Analysts warn that this saturation will lead to the disappearance of many funds. “If we look at the next 12 months, I wouldn’t be surprised if a lot of people disappear.”
This scenario of intense competition, fueled in part by a more permissive regulatory environment driven by President Donald Trump’s administration’s policies toward the digital asset sector, is laying the foundations for a surge of new financial products.
