Fewer ETFs Coming Than We Think, Says BlackRock Exec

If you’ve kept up with developments in the crypto space this year, you’ll know that exchange-traded funds (ETFs) have been a hot topic. 2024 started off with the approval of spot ETFs for Bitcoin, which had been pursued by different firms for years. It was a historic milestone and eventually saw the token reach a new all-time price high.

Months after, Ether became the second crypto token in the United States to get an ETF, and investors were whipped into a frenzy. The Ether ETFs have not been in the market for a week yet and there is already speculation about which token will be next in line. However, according to BlackRock Head of Digital Assets Robert Mitchnick, the number of tokens to get their own ETFs might be lower than we had imagined.

Crypto on the Rise

Over the years, the way that cryptocurrency is used has only become more sophisticated. Take the use of digital assets in the gambling space. It would have been very novel a decade ago but now it is not unusual to see crypto assets freely used to place bets (source: cryptocasinos.ltd). This has been thanks to the privacy and control they offer users, as well as the opportunity to make a profit.

There are crypto betting sites that accept virtually every crypto you can think of, and offer every casino game on the planet.

This intentional development of crypto use cases has also extended to seeking institutional support. We’ve seen the likes of PayPal and JP Morgan embrace crypto but the spot ETFs have been one of the most coveted milestones. And while we have ETFs for Bitcoin and Ether, Mitchnick says we shouldn’t hold our breath for many more.

In a conversation with Bloomberg Intelligence ETF analyst James Seyffart, he explained that few tokens match Bitcoin and Ether in influence that would justify having an ETF.

“If you think of bitcoin, today it represents about 55% of the market cap. ETH is at 18%. The next plausible investible asset is at, like, 3%. It’s just not close to being at that threshold or track record of maturity, liquidity, et cetera,” he said.

This is perhaps not the news that crypto lovers would want to hear, especially from someone at one of the firms that launched a spot ETF. So far, Solana, Dogecoin, and XRP have been rumored to be the next tokens to get an ETF, though nothing has been confirmed. All three tokens are among the top 20 by market cap and would certainly see some demand.

At the same time, some would argue that while they are prominent assets, they are not on the level of Bitcoin and Ether. Interestingly, Mitchnick noted that Bitcoin and Ether are not seen as competitors in the ETF space but rather as tokens that serve their own unique purposes.

Where Do We Go From Here?

If Mitchnick is right and there will not be many new spot ETFs being approved, what options does the crypto sector have? The chances of another token becoming as big as Bitcoin or Ether are quite slim and soon, we might just see that all the tokens that could be turned into ETFs have already done so.

Most likely, the industry will begin chasing new milestones and consider the ETFs a battle won. Meanwhile, the tokens that did become ETFs will continue to reap the benefits and the crypto space can consider it yet another step in the journey of mainstream acceptance and widespread use.