Turn back the clock to early January 2024, and the asset management industry was watching anxiously to see whether the long-awaited debut of US spot bitcoin exchange-traded funds could live up to expectations that they would rake in as much as $30 billion in their first exchange. year.
Today these issuers are breaking open the champagne.
That first wave of bitcoin ETFs attracted a whopping $65 billion in 2024, pushing the price of bitcoin from $43,000 to more than $100,000. The largest of these new products, BlackRock’s iShares Bitcoin Trust, has become the most successful debut in the ETF industry’s 35-year history.
But that’s just the start of the party, cryptocurrency residents believe.
Shortly after these products celebrate their first anniversary on January 10, newly elected President Donald Trump – who has pledged to become a crypto president – will be sworn in for the second time, which cryptocurrency fans say will usher in a new golden age for the world . digital asset class.
Requests for new and often new crypto products are already piling up in the inboxes of regulators.
“Everyone is now aware of how much money there is to be made, and with a new, friendlier government, there’s no reason not to go ahead and submit your best ideas to the regulators,” said Joe McCann, Founder and CEO from Digital Assets. hedge fund Asymmetric in Miami.
While Gary Gensler, chairman of Biden’s crypto-skeptical Securities and Exchange Commission, was forced to approve the first spot of bitcoin ETFs — and similar ethereum products — after losing a lawsuit, he continued to warn that cryptos are highly volatile and are plagued by fraud and manipulation. .
Paul Atkins, Gensler’s Trump-appointed successor, is widely seen as a proponent of digital assets.
By late November, companies including VanEck, 21Shares and Canary Capital had seized on these expectations of an increasingly crypto-friendly tone in Washington by filing at least sixteen applications to launch exchange-traded products that track crypto indices or tokens, such as the XRP from Solana and Ripple. , according to SEC filings and industry sources.
LIGHTER REGULATIONS EXPECTED
The push to launch the next wave of crypto products began weeks before the election, with many in the industry expecting lighter regulation regardless of whether Trump or his rival, Vice President Kamala Harris, won.
“Given that it takes several months to get regulatory approval and bring an ETF to market, many issuers began making a calculated bet that the environment would be different this year, and wanted to have their products ready to go in the queue have,” said Matthew. Sigel, head of digital asset research at VanEck, which hopes to launch a Solana ETF in 2025.
In addition to XRP and Solana, which are the fourth and sixth largest coins by capitalization according to CoinGecko, Canary has filed to launch products related to Litecoin and HBAR, less widespread coins, SEC filings show.
“The last piece of the puzzle was seeing who would be the next chairman of the SEC – that’s what we were counting on,” said Steven McClurg, who led the launch of the Valkyrie Bitcoin Fund in January and then launched new crypto asset manager Canary. Capital in October. “Now we’re off to the races,” he added.
However, the looming crypto-ETF gold rush is about more than just products tied to individual coins. New derivatives are about to make their debut within days of Trump’s inauguration, and new types of multi-asset or hybrid products are waiting in the wings.
Several issuers, including Calamos Investments, Innovator ETFs and First Trust, have filed for new funds that would use recently launched bitcoin ETF options to protect investors from losses on bitcoin itself. The first of these products are expected to debut on January 22, issuers say.
The SEC late last year approved options on a number of bitcoin ETFs, including BlackRock’s iShares Bitcoin Trust, and gave CBOE Global Markets the green light to launch options tied to the Cboe Bitcoin US ETF Index – paving the way for this series new ETFs.
Federico Brokate, head of US division for digital asset manager 21Shares, which has launched US bitcoin and ethereum ETFs, among a wider range of offerings in Europe, predicted that other new products could include exchange-traded funds linked to baskets of cryptocurrencies or who follow a course. mix of alternative assets, such as bitcoin and gold.
“Product innovation in the U.S. is just getting started,” he said.
To be fair, such new products are still a gamble.
While bitcoin ETFs have outperformed, ETFs launched in July and tied to the world’s second-largest token, ether, have attracted a relatively meager inflow of $12.8 billion, according to Paris-based TrackInsight. While the price of bitcoin more than doubled in 2024, ether lagged behind that pace, gaining 53%.
Because less widely held coins are still in their infancy, the factors that drive returns and volatility aren’t always clear, said Todd Sohn, ETF analyst at broker-dealer Strategas.
Although trading in Bitcoin and Ethereum futures and futures-based ETFs has existed in the US for several years, these are the only coins for which a futures market exists to date. Sohn said the existence of futures trading has given regulators confidence in the breadth and depth of both bitcoin and ether.
It also remains to be seen how quickly Atkins will embrace the most novel of the proposed products, given not only the potential risks but also the ongoing debate over whether or not these tokens are securities within the purview of the SEC.
Still, that regulatory uncertainty isn’t dampening the crypto asset management industry’s enthusiasm.
“The only limit to the products that emerge will be human creativity,” said VanEck’s Sigel.
(Reporting by Suzanne McGee; Editing by Michelle Price and Rod Nickel)
