Wall Street’s ETF Engine Accelerates Following Bitcoin Influx

• Asset managers race to launch innovative digital-asset ETFs, driven by rising Bitcoin and Ether inflows.
• ProShares and Hashdex lead the charge with new Bitcoin and Ether ETFs, reflecting growing market interest.
• The ETF market sees rapid growth and volatility, with new crypto products attracting significant investor attention.

Barely two days after the approval of Ether ETFs by US regulators, the race to introduce innovative digital-asset products is intensifying among asset managers. 

The cryptocurrency market, as reported by Bloomberg, is witnessing a surge in ETF filings, indicating the sector’s burgeoning appeal despite regulatory scrutiny. This trend is marked by asset managers eager to capitalize on the growing interest in digital assets.

On Wednesday, ProShares submitted paperwork for six new funds aimed at either going long or short on Bitcoin and Ether. This move underscores the firm’s proactive approach to tap into the digital-asset market, following the recent $17 billion inflow into Bitcoin funds. This surge places Bitcoin ETFs among the top-performing funds of the year, surpassing inflows into several major tech funds.

Hashdex has also announced plans to bundle Bitcoin and Ether into a single investment vehicle. This initiative reflects a growing trend among asset managers to create diversified crypto products to attract a broader investor base. 

Additionally, VanEck, known for its innovative ETF offerings, revealed last month its intention to launch an ETF focused on Solana, the fifth-largest cryptocurrency. However, analysts predict that launching such a fund might face significant hurdles.

The ETF market, valued at $9.4 trillion in the US, has seen a rapid increase in new fund launches. More than 330 new ETFs have commenced trading this year, approaching the 500 mark seen in the entirety of last year. Despite this growth, the market remains volatile, with over 100 ETFs closing down in 2024, mirroring last year’s figures.

The recent successful debuts of Bitcoin and Ether ETFs have exceeded many analysts’ expectations. Eight out of nine newly launched Ether ETFs have attracted significant investments since their inception earlier this week. Notably, products from BlackRock and Bitwise have each garnered over $200 million in inflows. 

According to Roxanna Islam, head of sector and industry research at VettaFi, the ETF market is likely to see continued innovation in crypto-related filings. She notes that while not all newly proposed ETFs will find a market, the rising interest in traditional spot-crypto ETFs is expected to spur further filings.