Crypto Fund Managers Predicted to See Surge in Assets Under Management
A research firm called Bernstein has forecasted that assets under management for crypto fund managers could increase by up to 13 times in the next five years. This growth is expected to be driven by the approval of spot crypto exchange-traded funds (ETFs). Currently considered a “cottage industry,” the crypto fund management sector could generate $50 billion in revenues during this period, according to Bernstein analysts led by Gautam Chhugani. They also predict that 2024 will be a landmark year for the regulatory approval of ETFs.
In the next 5 years, the capital in crypto funds may increase from $50 billion to $650 billion according to Bernstein analysts.
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Bernstein’s prediction aligns with recent applications for spot Bitcoin ETFs by major money management firms such as BlackRock and Fidelity. Other players like Cathie Wood’s Ark Invest and 21Shares have also entered the race to launch a spot Ethereum ETF. These developments are putting pressure on the Securities and Exchange Commission (SEC) to approve spot crypto products after losing a legal battle on the issue.
A court ruling in favor of Grayscale, which stated that spot Bitcoin ETFs are similar to Bitcoin futures ETFs already approved by the SEC, further bolstered confidence in the approval of a spot Bitcoin ETF. This ruling prompted JPMorgan to suggest that approval is now more likely, and former SEC chair Jay Clayton called it “inevitable.” However, the SEC has delayed its decision on spot Bitcoin ETF applications until next month.
Rise in Demand for Crypto Funds Expected
Bernstein anticipates increased demand for crypto funds driven by wealth and private banking-integrated products, investment advisors, and other industry participants. This would make ETFs more accessible in direct broker accounts, attracting a larger number of investors to engage with the crypto sector and bring more capital into the industry overall.
Hot Take: Crypto Fund Managers Set to Benefit from ETF Approval
The approval of spot crypto exchange-traded funds (ETFs) is expected to have a transformative effect on the crypto fund management industry. Research firm Bernstein predicts that assets under management could surge by up to 13 times in the next five years, resulting in $50 billion in revenues. This growth trajectory follows hype cycles typically seen in the crypto sector. The recent applications for spot Bitcoin and Ethereum ETFs by major financial players have put pressure on regulators to approve these products. A court ruling favoring Grayscale’s argument that spot Bitcoin ETFs are similar to approved futures ETFs has further increased the likelihood of approval. As demand for crypto funds rises and access to ETFs becomes easier, more investors are expected to enter the market, leading to exponential growth in the sector.
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