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Why Bitcoin ETFs were just the beginning — new funds featuring memecoins and leverage are coming

Why Bitcoin ETFs were just the beginning — new funds featuring memecoins and leverage are coming

DLNewsDLNews2024/12/30 04:57
By:Kyle Baird

The next generation of crypto ETFs will offer investors new ways to manage portfolios, researchers say.

Brace yourselves.

If 2024 was the year of the Bitcoin spot price ETF then 2025 will be the year when a wave of far more exotic offerings hits the market.

Think memecoins, AI tokens, and leverage.

“Crypto is on the verge of a transformation akin to the rise of the SP 500 in equity markets,” Presto Research analysts wrote in their end-of-year recap and prediction report.

New funds

New funds will cater to a growing demand for diversified crypto exposure and target sectors such as AI tokens, memecoins, and Bitcoin-heavy corporate strategies.

The idea is that a broader range of ETF offerings will enable investors to design more bespoke crypto portfolios. That’s how it works in stock-based ETFs.

The leap would mark the next evolutionary step for a market that is coming up on the one-year anniversary of the spot price Bitcoin ETFs in the US.

Eleven of them were approved in January while Ethereum ETFF approvals followed in May. And they’ve already raked in tens of billions of dollars in inflows.

Gaining traction

BlackRock’s iShares Bitcoin Trust manages more than $23 billion in net assets. In fact, out of the year’s 740 new ETFs, “the top 8 are now crypto-related,” wrote ETF Store President Nate Geraci.

With crypto projects developing distinct use cases and sector-specific dynamics, Presto Research analysts predict that index-based ETFs will gain traction in 2025.

They highlighted a shift from investors chasing individual tokens to those seeking broader exposure to specific niches like AI and memecoins.

These types of products were unlikely to be approved under SEC Chair Gary Gensler, known for his aggressive enforcement against crypto.

However, President-elect Donald Trump’s pick to head the agency, Paul Atkins, is a former SEC commissioner with strong crypto ties. He is expected to foster a more supportive regulatory environment.

In the works

Issuers are already starting to experiment with hybrid ETFs that blend crypto with traditional financial instruments.

ProShares has proposed products like the SP 500 Bitcoin ETF and the Gold Bitcoin ETF, which combine Bitcoin-denominated returns with established asset classes.

Another example is the proposed REX Bitcoin Corporate Treasury Convertible Bond ETF, designed to invest in bonds issued by Bitcoin-focused companies like MicroStrategy and MARA Holdings.

Geraci described these as “BTC hedged ETFs,” calling them evidence that “Bitcoin is starting to eat traditional finance.”

Crypto market movers

  • Bitcoin is down 1.1% over the past 24 hours to trade at $93,770.
  • Ethereum is up 0.7% over the same period to $3,420.

What we are reading

Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at kbaird@dlnews.com.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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