Market Analysis

Next-Gen U.S. Crypto ETFs: What's Coming Down the Pipeline

Amos Simanungkalit · 10 Jan687K Views

Image Credit: Reuters

At the beginning of January 2024, the asset-management industry eagerly anticipated the debut of U.S. spot bitcoin exchange-traded funds (ETFs), which were expected to attract up to $30 billion in their first year. Today, those expectations have been exceeded.

The first wave of bitcoin ETFs brought in an astounding $65 billion in 2024, helping drive the price of bitcoin from $43,000 to over $100,000. BlackRock's iShares Bitcoin Trust has become the most successful ETF launch in the industry's 35-year history.

However, this is just the beginning, according to cryptocurrency enthusiasts. After these ETFs celebrate their first anniversary on January 10, President-elect Donald Trump, who has expressed strong support for cryptocurrency, will take office for his second term, sparking hopes of a new golden era for digital assets.

With a more crypto-friendly administration, applications for new crypto products are pouring in. Joe McCann, CEO of digital asset hedge fund Asymmetric, notes that there’s now widespread awareness of the financial potential in crypto, and with Trump’s administration, the regulatory environment is expected to become more supportive.

Meanwhile, SEC Chair Gary Gensler, appointed by President Biden, has been cautious about approving crypto products due to volatility concerns, but after losing a court battle, he approved the first spot bitcoin ETFs and similar products for ethereum.

In anticipation of a more favorable regulatory climate under Trump, companies like VanEck, 21Shares, and Canary Capital have filed for new crypto exchange-traded products, including those tracking crypto indices and tokens like Solana and Ripple's XRP.

Many industry insiders began preparing for the shift in regulation even before the election, with a focus on filing crypto-related products early. Matthew Sigel of VanEck expects to launch a Solana ETF in 2025, and Steven McClurg, who helped launch the Valkyrie Bitcoin Fund, sees the arrival of a more crypto-friendly SEC as a catalyst for rapid growth in the sector.

The next wave of crypto products includes not only single-asset ETFs but also derivative products, including options on bitcoin ETFs, and multi-asset funds combining cryptocurrencies like bitcoin and gold. Some issuers are expected to debut these funds as early as January 22, after receiving approval for bitcoin ETF options in late 2023.

While bitcoin ETFs have experienced significant success, ethereum-based ETFs launched in July have seen slower growth, with $12.8 billion in inflows, and ether's performance lagging behind bitcoin's in 2024.

However, analysts believe the growing crypto futures market gives regulators confidence in the viability of both bitcoin and ether.

Despite the challenges and uncertainties surrounding newer, less widely-held coins, the crypto asset-management industry remains optimistic. "The only limit on what products emerge will be human creativity," said Sigel from VanEck.