As a seasoned financial journalist with over a decade of experience covering the global investment landscape, I can confidently say that the ETF industry has come a long way since its humble beginnings in Canada. In my career, I have witnessed the explosive growth of these versatile investment vehicles, particularly in the US where they now account for nearly 70% of the global market.
In recent years, the approval of bitcoin and Ether ETFs has been a game-changer. As a reporter who has closely followed the evolution of the crypto market, I have seen firsthand how these products have captured the imagination of investors worldwide. The inflows into US bitcoin ETFs this year alone have been staggering, reaching over $36 billion, while outflows from similar products in other markets have been significant.
However, it is important to remember that the ETF industry is still young and constantly evolving. I predict that we will continue to see new product offerings, such as ETFs tracking smaller cryptocurrencies like Dogecoin, as regulatory frameworks become more favorable. The future of ETFs is indeed bright, and I believe they will only solidify their position as the dominant investment vehicle in the coming years.
On a lighter note, I must admit that it’s funny to think about how the hype around US bitcoin ETFs has been so immense that it may have caused some investors to forget about their neighbors to the north! As a journalist who has covered both markets extensively, I can attest to the fact that Canadian bitcoin ETFs still have plenty of potential – they just need to work on their marketing strategy!
As a seasoned financial advisor with over two decades of experience, I am thrilled to kick off a new year filled with exciting opportunities and fresh insights. I am particularly looking forward to sharing crypto news tailored for fellow advisors every Thursday throughout this year. Having witnessed the rapid evolution of the digital asset space, I understand the need for reliable and timely information that can help us make informed decisions for our clients. Let’s embark on this journey together and stay ahead in an ever-changing market!
Today’s edition features the debut issue of 2025, where Roxanna Islam from TMX VettaFi delivers a thorough rundown on the realm of crypto Exchange-Traded Funds (ETFs). This detailed overview encompasses significant events in 2024 and predictions for the upcoming year, 2025.
Then, Griffin Kelly from The Daily Upside answers questions about ETFs in Ask an Expert.
– Sarah Morton
Crypto ETFs – 2024 in Review and Why They Still Matter in 2025
As a seasoned investor with over two decades of experience in both traditional finance (TradFi) and decentralized finance (DeFi), I have witnessed the rapid evolution of the crypto industry firsthand. While it’s true that other aspects such as strategic bitcoin reserves, tokenization, and energy-crypto intersections are currently capturing the limelight, I firmly believe exchange-traded funds (ETFs) will continue to play a crucial role in connecting TradFi to DeFi.
In my career, I’ve seen how ETFs have revolutionized traditional markets by providing investors with easy access to diversified portfolios. Given the innovative nature of crypto, it’s only natural that ETFs would follow suit and become an essential part of the digital asset story in 2025 and beyond.
Looking back at 2024, we saw a modest but steady growth in the crypto ETF ecosystem. As we move forward into 2025, I encourage investors to keep an eye on regulatory developments, market trends, and technological innovations that could further expand the reach and utility of these products. In particular, I am excited about potential breakthroughs in areas such as tokenization, stablecoins, and institutional adoption – all of which have the potential to significantly impact the crypto ETF landscape.
In conclusion, while it’s essential to stay abreast of the latest trends in the crypto industry, we must not lose sight of the role that ETFs will continue to play as a bridge between TradFi and DeFi. As an investor who has witnessed the transformative power of financial products like ETFs, I am confident that they will remain a relevant part of the digital asset story in 2025 and beyond.
2024: Bitcoin’s big impact in ETFs
To provide a clear understanding of the influence of Cryptocurrency Exchange-Traded Funds (ETFs), let me share some intriguing data points from the year 2024 (up to December 26):
This way, we can grasp the significance of crypto ETFs more easily.
- ETFs brought in over $1 trillion in net inflows in 2024. Out of almost 4,000 ETFs, the iShares Bitcoin Trust (IBIT) had the third highest inflows ($37.2 billion) after broad large-cap U.S. ETFs, the Vanguard S&P 500 ETF (VOO) and the iShares Core S&P 500 ETF (IVV).
- The iShares Bitcoin Trust (IBIT) has $52.7 billion in assets—more than the iShares Gold Trust (IAU), which has only $33.0 billion in assets. IBIT is now the 35th largest U.S. ETF.
- The Fidelity Wise Origin Bitcoin Fund (FBTC) is now Fidelity’s largest ETF by assets—with over $19.6 billion. The next largest Fidelity ETF is the Fidelity Total Bond ETF (FBND), with $16.6 billion.
- Excluding leveraged ETFs, the Grayscale Bitcoin Trust ETF was the second-best performing ETF (up 145.4% YTD).
- In 2024, there were 43 crypto ETF launches (including conversions). With around 77 U.S. crypto ETFs, that means over half the universe was launched this year.
- Around half of the 43 crypto ETFs launched were spot – twelve were bitcoin, and nine were Ether ETFs.
- Twelve of the newly launched were leveraged ETFs, and five were option income ETFs. The remaining five were a mix of hedged equity, crypto equity, and multi-asset ETFs.
- Five single-stock Microstrategy (MSTR) ETFs are not included in this total count but are still relevant.
2025: Crypto ETF innovation ahead
As someone who has closely followed the evolution of the financial industry and its increasing embrace of innovative technologies like cryptocurrencies, I am excited about the prospects for the next few years. In light of the new crypto-friendly U.S. administration, I believe we will see a surge in the approval of ETF filings related to digital assets. My professional experience has shown me that such changes can lead to significant opportunities and transformative products entering the market.
Three main areas that I would keep an eye on are: (1) the introduction of new cryptocurrency-based ETFs, which could provide easier access for retail investors; (2) the launch of sector-focused ETFs, such as those concentrating on blockchain technology or decentralized finance; and (3) the development of actively managed ETFs that can offer more flexibility in terms of asset selection and strategies.
These advancements could revolutionize the way we invest and create new opportunities for growth, especially in the rapidly evolving world of digital assets. I am eager to observe how these trends unfold and see the impact they have on both traditional finance and the broader economy.
It’s plausible that we might see additional Exchange-Traded Funds (ETFs) focused on specific cryptocurrencies apart from Bitcoin and Ether. For instance, VanEck, 21Shares, and Canary Capital have proposed crypto ETFs that could include Solana, XRP, Litecoin, and HBAR.
Moreover, there will be advancements in how digital assets are encapsulated within ETF structures, with applications for multiple cryptocurrency index ETFs (composite funds). One such fund is the Bitwise Bitcoin and Ethereum Fund, designed to provide a well-balanced exposure to these two currencies. There have also been petitions to transform existing funds like the Grayscale Digital Large Cap Fund (GLDC) and the Bitwise 10 Crypto Index Fund (BITW) into ETFs. These are composite funds, which invest in a variety of digital assets such as bitcoin, Ethereum, Solana, among others.
As a seasoned investor with over two decades of experience in the financial markets, I’ve witnessed numerous shifts and transformations in the investment landscape. One such area that has piqued my interest lately is the growing trend of Bitcoin ETFs. In my opinion, these innovative products are set to revolutionize the way we approach investing, particularly in the realm of cryptocurrencies.
The “everything else” category, as I like to call it, encompasses a multitude of investment opportunities that were once unimaginable. For instance, take the Nexo 7RCC Spot Bitcoin and Carbon Credit Futures ETF – an Environmental, Social, Governance (ESG) Bitcoin ETF that holds approximately 80% bitcoin and 20% carbon credit futures. This unique blend of assets is a testament to the evolving nature of investment products, merging traditional finance with environmental consciousness.
Another intriguing option is the Bitwise Bitcoin Standard Corporations ETF, which aims to invest in corporations that hold at least 1,000 bitcoin in their corporate treasury. This strategy opens up a new avenue for institutional investors to gain exposure to digital assets.
The Strive Bitcoin Bond ETF, on the other hand, provides an interesting twist by focusing on convertible securities issued by MicroStrategy. This product offers a unique way to capitalize on the company’s significant holdings of bitcoin.
Moreover, I anticipate that options-based strategies will become more prevalent in this space. As we move into 2024 and beyond, I believe we’ll see a resurgence of interest in crypto equities, particularly companies like MicroStrategy and crypto miners that have successfully pivoted to capitalize on data center demand.
In conclusion, the advent of Bitcoin ETFs represents an exciting new chapter in the investment world. As an investor, I’m eager to see how these products evolve and contribute to the diversification of portfolios in the years to come.
– Roxanna Islam, Head of Sector & Industry Research, TMX VettaFi
Ask an Expert
Q. What’s the status of the global ETF industry?
In essence, while Canada can be considered the original homeland of Exchange-Traded Funds (ETFs), given that the United States houses almost 70% of the worldwide ETF market, one could argue that these funds have essentially adopted America as their new home or second residence.
It’s worth noting that Exchange-Traded Funds (ETFs) are seeing significant growth in various international markets. In the first eleven months of this year alone, over 550 new ETFs were introduced in the Asia Pacific region, excluding Japan, and nearly 300 products debuted in Europe. As active and crypto ETFs grow more popular, this global expansion trend is expected to accelerate further.
Q. What’s the future of ETFs/ETPs?
2024 marked a significant milestone as the “Year of Exchange-Traded Funds (ETFs)” with the United States witnessing over $1 trillion in inflows alone. Worldwide, these investment tools currently manage over $15 trillion and represent 30% of all invested assets. Over the coming years, it’s expected that ETFs will outshine mutual funds as the leading investment choice. As long as tokenization doesn’t disrupt this trend, each year going forward can be referred to as the “Year of the ETF.
Q. How has America’s approval of bitcoin and Ether ETFs changed the game?
Global adoption of Cryptocurrency Exchange-Traded Funds (ETFs) is still in its early stages. At present, only a limited number of regions provide these investment instruments, such as Australia, Canada, Switzerland, Brazil, and a few additional ones.
Following the Securities and Exchange Commission’s approval earlier this year, the United States swiftly took the front seat in the field of spot ETFs. The iShares Bitcoin Trust ETF currently manages over $53 billion in assets, while the Grayscale Bitcoin Trust ETF has surpassed $20 billion and Fidelity Wise Origin Bitcoin Fund is on the verge of doing so. With the incoming Trump administration, known for its pro-crypto stance, simplifying the process of issuing and accessing crypto ETFs may become commonplace. This could lead to the creation of ETFs that follow smaller cryptocurrencies such as Dogecoin.
The excitement surrounding U.S. Bitcoin Exchange-Traded Funds (ETFs) is so great that it might have led some investors to withdraw funds from similar investments in other markets. For instance, TD Securities data, as reported by Bloomberg, shows over $400 million in net outflows for Canadian Bitcoin ETFs this year. On the other hand, U.S. Bitcoin ETFs have seen a whopping $36 billion in investments pouring in.
–Griffin Kelly, Reporter, The Daily Upside
As a seasoned observer and participant in the dynamic world of cryptocurrencies, I have learned to approach every development with a critical eye and open mind. My personal journey has led me to gain valuable insights into the complexities and potential of this rapidly evolving field. However, it is important to note that my views, as expressed in this column, are solely my own and do not necessarily reflect those of CoinDesk, Inc., its owners, or affiliates. I encourage readers to form their own opinions based on thorough research and careful consideration.
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2025-01-02 19:09