Diversified Crypto ETFs: The Next Wave of Adoption?

WisdomTree's head of digital assets, Will Peck, forecasts that exchange-traded funds (ETFs) holding diversified baskets of cryptocurrencies are poised to fill a significant void in the investment landscape. Speaking at The Bridge conference in New York City, Peck told Cointelegraph, "It does seem like that’s going to be one of the next waves of adoption. It solves a need, I think."

Simplifying Crypto Investment for Newcomers

Peck elaborated that while many new investors now grasp the concept of Bitcoin (BTC), they often find it challenging to evaluate the "next 20 range of assets." He emphasized that a multi-asset crypto basket provides them with exposure to the sector while mitigating the "idiosyncratic risk" inherent in investing in individual tokens.

Investing in Underlying Technology

Peck highlighted that crypto should be viewed not just as an asset class, but as a 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," he explained.

Growing Crypto ETF Launches

This year has seen a surge in the launch of crypto index ETFs. Most recently, asset manager 21Shares introduced two crypto Index ETFs regulated under the Investment Company Act of 1940. Earlier this year, Hashdex expanded its Crypto Index US ETF to include XRP (XRP), SOL (SOL), and Stellar (XLM), following a generic listing rule change from the Securities and Exchange Commission (SEC).

Predicting Crypto ETF Adoption

Peck acknowledged that predicting the exact timing of broader adoption for crypto index ETFs is "tough exactly to forecast," but suggested it may be inevitable given the straightforward utility of a product offering broad exposure. He anticipates a rise in new crypto ETF launches as issuers compete for an early advantage, potentially diminishing the perception that an ETF automatically confers authority or credibility to a cryptocurrency token.

Bitcoin ETF Success Exceeds Expectations

Furthermore, Peck stated that the "overall success" of spot Bitcoin ETFs since their launch in January 2024 has surpassed his initial 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. According to Farside, US-based spot Bitcoin ETFs have accumulated around $58.83 billion in net inflows since launch.

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