Many Crypto ETFs Can Close Soon After Launching: Analyst

More than 100 crypto-exchange-traded products could enter the market by 2026, but many will close quickly due to lack of demand, the analyst says.

Bloomberg analyst James Seifert said on Wednesday he agreed with crypto asset manager Bitwise's forecast that more than 100 crypto ETFs would launch by 2026, but said many would not last.

We see a lot of liquidity in crypto ETP products. Maybe by [the] But the tail end of 2026 could be as late as 2027,” Seifert said, adding that more than 126 ETP applications are currently awaiting results from the US Securities and Exchange Commission.

“Suppliers are throwing a lot of products at the wall.”

Last year, a total of 622 ETFs closed, including more than 189 in the U.S., The Daily Upside reported last month. Morningstar reported in January 2024 that the 244 ETFs in the U.S. closed in 2023 had an average age of 5.4 years.

Many of these investment products were closed due to failure to attract sufficient returns, resulting in low assets under management.

Several crypto ETPs have liquidated this year, the most notable being the ARK 21Shares Active Bitcoin Ethereum Strategy ETF (ARKY) and the ARK 21Shares Active On-Chain Bitcoin Strategy ETF (ARKC).

SEC listing requirements to trigger mass approvals

Industry analysts expect an explosion in the number of crypto ETPs approved in 2026 under the SEC's new comprehensive listing requirements, which will not require each application to be reviewed on a case-by-case basis.

Even before the SEC's comprehensive listing standards took effect in September, asset managers filed to launch ETFs tied to increasingly speculative tokens like Melania Trump's memecoin.

ETFs tracking Litecoin (LTC), Solana (SOL) and XRP (XRP) launched this year with relative success expanding from the Bitcoin (BTC) and Ether (ETH) ETFs launched in 2024.

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Since its launch in January 2024, the Spot Bitcoin ETF has accumulated $57.6 billion in U.S. assets, while the SpotEther ETF has accumulated $12.6 billion as of July 2024, according to data from Farside Investors.

Meanwhile, Solana ETFs from Bitwise, VanEck, Fidelity, 21Shares, Franklin Templeton and Grayscale have seen $725 million since the end of October.

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