New Cryptocurrency ETFs See Modest Inflows Amid Market Dynamics

According to Cointelegraph, two recently launched cryptocurrency exchange-traded funds (ETFs) featuring a mix of Bitcoin (BTC) and Ether (ETH) have experienced modest inflows since their introduction. The Franklin Crypto Index ETF (EZPZ), backed by asset manager Franklin Templeton, has accumulated approximately $2.5 million in net assets since its launch on February 20, as reported by Franklin Templeton's website. Meanwhile, the Nasdaq Crypto Index US ETF (NCIQ) by asset manager Hashdex has attracted just over $1 million since its debut on February 14, according to Hashdex's website. In comparison, Franklin Templeton's Franklin Bitcoin ETF (EZBC), a spot Bitcoin ETF, saw significant interest, drawing around $50 million in net inflows on its first day after launching in January 2024, based on data from Statista. Another ETF focused solely on Bitcoin, the Bitwise Bitcoin ETF (BITB), garnered nearly $240 million on its initial trading day. Single-asset spot Ether ETFs, however, witnessed weaker early investor interest, with approximately $100 million in net inflows on their first trading day, July 23. The two new ETFs aim to provide U.S. investors with a comprehensive crypto portfolio by tracking a diverse index of crypto assets. These funds track indexes that hold cryptocurrencies in proportion to each token's market capitalization, predominantly consisting of BTC, which had a market capitalization of about $1.9 trillion as of February 21, according to Google Finance. However, the utility of these funds is currently limited as they are only authorized to hold Bitcoin and Ether. Both funds aspire to eventually include a diversified portfolio of various crypto assets, pending regulatory approval. In October, NYSE Arca, a securities exchange, sought permission to list a Grayscale ETF that would hold a more diverse basket of spot cryptocurrencies. The Grayscale Digital Large Cap Fund, established in 2018 but not yet exchange-traded, includes a crypto index portfolio comprising Bitcoin, Ether, Solana (SOL), and XRP (XRP), among others. The U.S. Securities and Exchange Commission (SEC) has acknowledged numerous applications for new types of ETFs, including those holding altcoins like SOL and XRP. Analysts anticipate the approval of more diverse crypto ETFs in 2025.