An analysis by Bernstein Research has shown that the exchange-traded funds (ETFs) sector could move from a $50 billion industry to $650 billion in the next five years. Citing several factors, the speculation, led by Gautam Chhugani, showed that the emergence of crypto funds could well be on its way to massive growth.
The analysts stated that the growing belief that the Securities and Exchange Commission (SEC) will approve its first Bitcoin spot ETF in the coming days will fuel a massive run for the now $50 billion sector. Secondly, the analysts believe that the growing appetite by institutions to get exposed to cryptocurrencies shows that the crypto fund market is still early and has the potential to grow its worth by over 600% in the next five years.
Bitcoin Spot ETF Approval
The approval of a Bitcoin spot ETF is looking even more likely as the largest asset manager in the world, BlackRock, joined the quest for a spot exchange-traded fund. Grayscale’s latest victory over the US SEC has also pressured the regulator to consider granting its first spot Bitcoin ETF as soon as possible.
The analysts noted that if the SEC stops delaying proceedings and grants a Bitcoin spot ETF, the product should come to the market early next year. According to them, the spot crypto funds would have about 10% share of the market capitalizations of both Bitcoin and Ethereum.
Top firms like BlackRock, Fidelity, Cathie Woods’ Ark Invest, and Wisdom Tree have all lined up Bitcoin spot ETF filings for the SEC to approve. Grayscale, Bitwise, ProShares, and VanEck also filed for an Ether Futures ETF.
Institutions Show Interest
Institutions seem to have kept the FTX saga behind them, as they have developed a rather fascinating interest in crypto projects, tokenization, and stablecoin creation. Top companies like Microsoft and PayPal have all recently decided to soil their hands with web3 adoption, stablecoin creation, and tokenization.
“Crypto financial adoption follows hype cycles, and we expect a hockey stick adoption, with 2024 as the landmark regulatory year for approval of ETFs,” the analysts stated.
But Chhugani and his team raised concerns over regulatory uncertainties, citing them as a major hindrance to institutions fully embracing cryptocurrencies. The US regulator recently noted that crypto firms should expect more clampdowns on the sector soon.
The analysts expressed optimism about the lack of legislation and noted that the Coinbase case with the SEC would help straighten out regulation. “The meat of regulatory backlash is done for now, and the Coinbase case will provide further clarity,” the analysts noted.
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