Happy New Year to all advisors! We look forward to bringing you crypto news for advisors every Thursday this year.
In today’s issue, our first newsletter of 2025, Roxana Islam TMX’s VettaFi provides a comprehensive guide to the world of crypto ETFs, looking at what happened in 2024 and what to expect in 2025.
after that, griffin kelly Get your ETF questions answered on The Daily Upside’s Ask an Expert.
In the broader cryptocurrency industry, exchange-traded funds ( ETFs) are fading somewhat into the background. But for advisors, individual investors, and many institutional investors, ETFs are the bridge from TradFi to DeFi and will remain a relevant part of the digital asset story well into 2025. If cryptocurrency innovation is expected to continue, the cryptocurrency ETF ecosystem also continues to grow. Here’s how crypto ETFs will look in 2024 and what to watch for in 2025.
To put the impact of crypto ETFs into perspective, here are some interesting numbers for 2024 (year-to-date through December 26th).
ETFs brought in over $1 trillion in net inflows in 2024. Among approximately 4,000 ETFs, iShares Bitcoin Trust (IBIT) had the third-highest inflows ($37.2 billion) after the Vanguard S&P 500 ETF (VOO), a large-cap U.S. ETF. iShares Core S&P500 ETF (IVV).
The iShares Bitcoin Trust (IBIT) has $52.7 billion in assets, more than the iShares Gold Trust (IAU), which has only $33 billion in assets. IBIT is currently the 35th largest ETF in the United States.
The Fidelity Wise Origin Bitcoin Fund (FBTC) is currently Fidelity’s largest ETF by assets, with over $19.6 billion in assets. The next largest Fidelity ETF is the Fidelity Total Bond ETF (FBND) at $16.6 billion.
Excluding leveraged ETFs, the Grayscale Bitcoin Trust ETF was the second-best performing ETF (up 145.4% year-to-date).
43 crypto ETFs were launched in 2024 (including convertibles). There are approximately 77 crypto ETFs in the United States, which means more than half of the world’s ETFs were launched this year.
Of the 43 crypto ETFs launched, about half were spot, 12 were Bitcoin and 9 were Ether ETFs.
Twelve of the new ETFs were leveraged ETFs and five were option income ETFs. The remaining five were a combination of hedge stocks, crypto stocks, and multi-asset ETFs.
The five Single Stock MicroStrategy (MSTR) ETFs are not included in this total, but are still relevant.
Looking ahead to 2025, several ETF applications are already in various stages of approval. With the new crypto-friendly administration in the US (including a change in SEC leadership), issuers are filling their pipelines with potential new products. There are probably three main areas to focus on.
First, there may be more spot ETFs that go beyond Bitcoin and Ether. VanEck, 21Shares, and Canary Capital have filed for crypto ETFs, including spot Solana and XRP ETFs. Canary Capital also Litecoin ETF and HBAR ETF.
Furthermore, there will be further innovation in the way digital assets are packaged into ETF wrappers. These include the filing of several cryptocurrency index ETFs (multi-token funds). One of the proposed funds is Bitcoin and Ethereum Funds per BitThis gives you balanced exposure to both currencies. There was also a request to convert Grayscale Digital Large Cap Fund (GLDC) and Bitwise 10 Crypto Index Fund (BITW) to ETFs. These are multi-token funds that hold Bitcoin, Ether, Solana, etc.
Finally, there is a category called “Everything else.” This includes literally anything you can think of. for example, Nexo 7RCC Spot Bitcoin and Carbon Credit Futures ETF is an ESG Bitcoin ETF that holds approximately 80% Bitcoin and 20% carbon credit futures. of Bitwise Bitcoin Standard Corporation ETF I plan to invest in companies that have at least 1,000 Bitcoins in their treasury. of Strive Bitcoin Bond ETF It is intended to provide exposure to convertible notes issued by MicroStrategy. I also think we’ll see more options-based strategies. And as we’ve seen heading into late 2024, there’s a resurgence of interest in MicroStrategy and crypto miners, and a return to popularity for crypto stocks that are poised to profit from data center demand. .
Q. What is the situation in the global ETF industry?
America is still the home of ETFs. Although Canada is technically its birthplace, the US accounts for nearly 70% of the global ETF market, so I think it’s safe to call rappers expatriates at this point.
That being said, ETFs are rapidly gaining traction in many international markets. According to ETFGI, more than 550 ETFs were launched in the Asia-Pacific region (excluding Japan) in the first 11 months of this year, and nearly 300 products were launched in Europe. This global adoption trend will further accelerate as active ETFs and crypto ETFs become increasingly attractive.
Q. What does the future hold for ETFs/ETPs?
2024 was undoubtedly the “Year of the ETF,” with over $1 trillion in inflows in the U.S. alone. Globally, ETFs currently hold over $15 trillion in assets, accounting for 30% of all invested assets. Within the next 10 years or so, mutual funds may overtake mutual funds as the dominant investment vehicle. And until tokenization rocks that boat, every year from now on will probably be the year of the ETF.
Q. How has the US approval of Bitcoin and Ether ETFs changed the situation?
Crypto ETFs are just beginning to gain popularity around the world. Only a few markets offer them, including Australia, Canada, Switzerland, Brazil, and several other markets.
The United States quickly became the leader in spot ETFs after the Securities and Exchange Commission approved the first one earlier this year. The iShares Bitcoin Trust ETF has over $53 billion in net assets. Meanwhile, the Grayscale Bitcoin Trust ETF has surpassed $20 billion, and the Fidelity Wise Origin Bitcoin Fund is about to surpass $20 billion. The incoming Trump administration is expected to be very supportive of cryptocurrencies, and is likely to make it much easier to issue and access crypto ETFs. ETFs tracking smaller cryptocurrencies like Dogecoin may start to emerge.
The hype surrounding US Bitcoin ETFs is so huge that some investors may have pulled their assets from similar products in other markets. For example, Canadian Bitcoin ETFs experienced more than $400 million in net outflows this year, according to TD Securities data reported by Bloomberg. Meanwhile, US Bitcoin ETFs recorded inflows of $36 billion.
