The institutional interest in cryptocurrencies has reached an unprecedented high. According to data shared by Bloomberg’s seasoned ETF analyst, Eric Balchunas, the count of globally filed cryptocurrency-based Exchange Traded Product (ETP) applications has surged to 155. These applications span 35 different cryptocurrencies and are projected to reach 200 within the next 12 months. This surge in applications indicates a growing preference for cryptocurrencies within the traditional financial world.
Rising Institutional Demand Intensifies the ETP Race
The table shared by Balchunas and referenced by Wu Blockchain highlights that investor interest has predominantly centered on ETPs focused on Solana (23), Bitcoin (23), and XRP (20). Ethereum and basket ETPs covering multiple cryptocurrencies have also reached double-digit application numbers. This trend reveals that investment flow is not limited to Bitcoin alone, but is rapidly diversifying into alternative cryptocurrencies. The varied use cases like Solana’s high transaction speed and XRP’s role in cross-border payments support evolving investment strategies.
Three primary factors drive the rise in cryptocurrency ETP applications. Firstly, clearer regulations in many countries contribute to this trend. Secondly, institutional investors seek to invest in cryptocurrencies without direct ownership. Thirdly, competition among asset management firms plays a crucial role. Each of these factors aims for the first product approval in trending cryptocurrencies to gain a market advantage.
Market Maturity Progresses, But Risks Persist
The increase in ETP numbers signifies a wider range of investment options for both individual and institutional investors. Accessed through intermediaries rather than crypto exchanges, these products facilitate portfolio diversification with their regulated structures. However, not all products offer the same degree of safety or liquidity. Investors need to thoroughly understand the underlying assets and risk levels. Additionally, many applications are still pending approval, and regulatory stances will determine which ETPs enter the market.
As competition intensifies, a significant downward pressure on fund management fees is anticipated. Companies aiming to stand out among over 150 applications will endeavor to attract investors with low-cost products. However, gaining investor trust is as crucial as obtaining approval.