Anticipating a Gap in the Market
Will Peck, WisdomTree’s head of digital assets, anticipates that exchange-traded funds (ETFs) holding diversified baskets of cryptocurrencies will fill a significant gap in the market in the coming years. "It does seem like that’s going to be one of the next waves of adoption," Peck told Cointelegraph at The Bridge conference in New York City on Wednesday. "It solves a need, I think," he added.
Peck explained that while many new investors now understand the concept of Bitcoin (BTC), they often struggle to judge the "next 20 range of assets." He stated that a multi-asset crypto basket provides them with exposure to the sector while mitigating the "idiosyncratic risk" of investing in individual tokens.
Index ETF Investors Will Back the Technology
"Crypto we talked about as an asset class, but it’s really a technology, and the underlying return drivers of each of these tokens are actually quite different, even though they’re correlated, generally, just because that’s where the market is," Peck explained.
This prediction comes as several crypto index ETFs have launched this year. Most recently, on Thursday, asset manager 21Shares launched two crypto Index ETFs, which are regulated under the Investment Company Act of 1940. Just a couple of months prior, on September 25, asset manager Hashdex expanded its Crypto Index US ETF to include XRP (XRP), SOL (SOL), and Stellar (XLM), following the generic listing rule change from the Securities and Exchange Commission (SEC).
Peck said the timing of broader adoption for crypto index ETFs is "tough exactly to forecast," but suggested it may be inevitable given the straightforward utility of having a product that provides such exposure.
Peck expects a surge in new crypto ETF launches as ETF issuers compete for early advantage, which he said may erode the idea that an ETF automatically signals the cryptocurrency token has any authority or credibility.
Bitcoin ETF Success Surpassed Expectations
"I think it’s going to be a shift, like, where, five years ago, you said, Oh, if something has an ETF, like, Bitcoin is going to get one, maybe it’s the first one, it must have some sort of institutional stamp of, like, approval," he said.
"I don’t think that’s necessarily how the SEC should be, a merit-based regulator in that regard, right? And it’s really going to be on clients making the right choices with their own money," Peck added.
Meanwhile, Peck said that the "overall success" of spot Bitcoin ETFs since their launch in January 2024 has surpassed his expectations.
"It’s remarkable to me how big the Bitcoin ETF categories, crypto in general, is one of the most competitive parts of the US ETF market," he said.
Since the launch of US-based spot Bitcoin ETFs, the products have accumulated around $58.83 billion in net inflows, according to Farside.