The cryptocurrency ETF market appears poised for diversification in 2024, though analysts warn that newcomers may struggle to match the remarkable success of bitcoin ETFs’ debut year.
Bitcoin ETFs set a high bar in their inaugural year, attracting $36 billion in net new assets, with BlackRock’s iShares Bitcoin Trust leading the charge. This success story catalyzed institutional adoption and contributed to doubling cryptocurrency market capitalization in 2024.
However, JPMorgan analyst Kenneth Worthington suggests a more modest outlook for upcoming crypto ETFs. While applications for funds tracking Solana, XRP, Hedera, and litecoin are in the pipeline, alongside a proposed hybrid bitcoin-ether fund, these products may see significantly lower inflows.
Using current adoption metrics, JPMorgan projects Solana-based ETFs could attract $3-6 billion in net new assets, while XRP-linked funds might draw $4-8 billion. These estimates pale in comparison to bitcoin ETFs, which now represent 6% of bitcoin’s market cap, while ether ETFs account for just 3% of ether’s market value after six months of trading.
The regulatory landscape could prove pivotal for innovation in crypto ETFs. Industry observers anticipate that a potentially crypto-friendly Congress and White House in 2025 might foster growth in crypto businesses and influence product development.
Tyron Ross, president of 401 Financial, maintains that while bitcoin ETF demand will likely remain “healthy” in the coming year, it won’t match 2024’s exceptional performance. He points to a crucial catalyst for future growth: the inclusion of crypto in Wall Street’s model portfolios. “Until crypto is integrated into these models, we won’t see that next leg of growth,” Ross noted.
As the crypto ETF market matures, the industry faces a balancing act between innovation and realistic expectations, with regulatory clarity potentially shaping its trajectory.
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