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Happy New Year, advisors! As people start celebrating New Year 2025, the world of crypto ETFs explains the market bond between Tradfi and Defi. While the rest of the crypto industry migrates resources to things like tokenization, strategic Bitcoin holdings, and the merging of energy and crypto, crypto ETFs remain essential for both retail and institutional investors. In this, you read about the crypto ETF for 2024 and what to expect in the subsequent year.
2024: A Year of Growth and Impact for Crypto ETFs
The market of crypto ETFs displayed a strong dynamic in 2024, and certain records that were achieved prove their increasing importance in the financial system.
Key Achievements in 2024
1. Massive Inflows into Crypto ETFs:
Global ETF assets grew to $7.6 trillion as ETFs attracted more than $1 trillion in net inflows in 2024, while crypto-ETFs played their part. Looking at nearly 4,000 ETFs in the United States, the new entrant to the U.S market, iShares Bitcoin Trust (IBIT) was able to manage to get the third highest flows of $37.2 billion following Vanguard S&P 500 ETF (VOO) and iShares Core S&P 500 ETF (IVV).
2. Bitcoin ETFs Surpassing Gold ETFs:
The iShares Bitcoin Trust (IBIT) reached $ 52,7 billion by the end of the year, while the iShares Gold Trust (IAU) reached only $ 33,0 billion. This brought out a change in investor preference towards digital assets over safe-haven assets such as gold.
3. Performance Highlights:
- Climbing the ladder to the second position, Grayscale Bitcoin Trust ETF made an astounding 145.4% return for the year.
- Fidelity’s Wise Origin Bitcoin Fund (FBTC) for bitcoins turned out to be the largest of the Ethereum ETFs, with over $ 19.6 billion in assets.
4. Proliferation of Crypto ETFs:
As many as 43 new crypto ETFs were launched in 2024, which, collectively with the 77 currently available, make up more than half of the financial products that investors can use to access digital assets. Of these, there were 12 spot Bitcoin ETFs, 9 spot Ether ETFs, leveraged, option-income and other multi-asset ETFs.
5. Spot ETFs Gain Traction:
Bitcoin and Ether led the cryptocurrency ETF stampede. The introduction gave investors a more direct and more efficient way to own digital assets.
2025: What’s Next for Crypto ETFs?
Given a new U.S. crypto-friendly administration and the new leadership in place at the SEC for 2025, crypto ETFs are set to expand and innovate. This year we expect the market to be shaped by several key trends and developments.
Expanding Outside of Bitcoin and Ether
But spot ETFs are also likely to grow beyond just Bitcoin and Ether. VanEck, 21Shares and Canary Capital are already well-known issuers that have filed for ETFs on Solana, XRP, Litecoin or Hedera Hashgraph (HBAR). The diversification on offer will give investors exposure to a wider variety of digital assets.
Crypto Index ETF introduction
We expect multi-token funds to gain some popularity, providing diversified exposure to multiple cryptocurrencies. Notable examples include:
- Balanced exposure to both assets in the Bitwise Bitcoin and Ethereum Fund.
- The potential conversion of GLDC the Grayscale Digital Large Cap Fund and BITW the Bitwise 10 Crypto Index Fund to ETFs that provide exposure to assets such as Bitcoin, Ether and Solana.
Innovative ETF Products
The market is witnessing the emergence of niche ETF strategies that combine crypto with other themes:
- ESG Integration: For environmentally conscious investors, the Nexo 7RCC Spot Bitcoin and Carbon Credit Futures ETF will blend Bitcoin exposure with carbon credit futures.
- Corporate Bitcoin Treasuries: The Bitwise Bitcoin Standard Corporations ETF will focus on companies that own at least 1,000 Bitcoin in their corporate reserves.
- Crypto Equities: The Strive Bitcoin Bond ETF will invest in convertible securities from companies like MicroStrategy.
Furthermore, the rise of crypto miners and data centres, driven by the AI boom and greater computing demand could spur more equities-based crypto ETFs, too.
Why Crypto ETFs Still Matter
To advisors and investors looking for regulated, easy access to the market, crypto ETFs are indispensable. However, they simplify the process of directly getting, keeping, and running cryptocurrencies through their introduction to a wider audience.
The ability for institutional investors to integrate crypto into portfolios, without deviating from traditional investment structures, is a benefit of ETFs. The ultra-low cost, liquidity and transparency that ETFs offer are good for the retail investor as well.
What to Watch in 2025
Regulatory Developments:
We should also see faster approvals for new crypto ETFs with a more friendly regulatory environment and fewer obstacles to new innovative products.
Market Adoption:
As more investors start to adopt the crypto ETFs, these will play an increasingly special role in bridging TradFi and DeFi leading to more mainstream digital asset adoption.
Performance and Volatility:
Crypto ETF performance will continue to be affected by the broader crypto market. When Bitcoin and Ether prices fluctuate, so too will investors’ sentiment towards these funds.
