Since the approval of spot Bitcoin and Ethereum ETFs in the U.S. market in early 2024, cryptocurrency ETFs have been on the rise. This adoption could accelerate significantly over the next year.
ETFs: A Good Way to Gain Exposure to New Asset Classes
The U.S. market for spot crypto ETFs remains very limited for now, even though the Securities and Exchange Commission (SEC) finally seems poised to approve a multitude of funds tracking cryptocurrencies other than Bitcoin and Ethereum, such as Bitwise’s Solana BSOL ETF, which has just emerged as the best launch of the year.
This market was recently analyzed comprehensively in a report by Schwab Asset Management, as an ever-increasing number of investors are drawn to the benefits of these exchange-traded funds, such as “lower fees, tax efficiency, and liquidity.”
It appears that 62% of investors already active in the ETF market plan to allocate their entire portfolios to this type of fund over the next few years, with 66% favoring index funds and 65% favoring asset-based funds.
This is a notable trend that offers many opportunities, as “ETFs are no longer the new kids on the block, but they still have a long way to go in terms of awareness and adoption,” according to David Botset, CEO of Schwab Asset Management. And why not with the new asset class represented by cryptocurrencies?
Preference for active or index ETFs by asset class
The world of investing is undergoing rapid transformation as individual investors gain access to new asset classes. They are using ETFs—now more numerous than individual stocks in the United States—not only to build low-cost portfolios but also to explore an ever-expanding universe of opportunities.
David Botset
Millennials Are Flocking to Cryptocurrencies
According to data from Schwab Asset Management, 94% of active ETF investors believe these funds help them reduce their portfolio costs. At the same time, nearly half say that ETFs also allow them to “invest in targeted strategies separate from their long-term portfolio” (49%) or “gain access to new asset classes” (46%).
But another finding also appears very promising: 45% of investors surveyed say they plan to invest in crypto ETFs over the coming year. This is the highest percentage, just behind U.S. stocks (52%) and tied with the bond market.
Asset classes in which investors plan to invest
In this area, Millennials are once again leading the way, with an ever-increasing interest in ETFs, which are seeing the fastest adoption. As a result, they are at the forefront as the investors most likely to adopt a 100% ETF portfolio strategy.
There is a very strong enthusiasm for what Schwab Asset Management refers to as “specialized ETFs,” including, in particular, spot crypto ETFs (44%) and individual stock ETFs (43%). When it comes to cryptocurrencies, the figures drop to 33% for Generation X and just 11% for baby boomers.
These figures demonstrate just how much younger generations are emerging as the primary source of demand for crypto ETFs and niche financial products.
