Since the approval of spot Bitcoin and Ethereum ETFs on the US market in early 2024, exchange-traded funds applied to cryptocurrencies 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 US spot crypto ETF market remains very limited for the time being, even though the Securities and Exchange Commission (SEC) seems to have finally decided to approve a multitude of funds applied to cryptocurrencies other than Bitcoin and Ethereum, such as Bitwise’s Solana BSOL version, which has just established itself as the best launch of the year.
This market was recently analyzed in a comprehensive report by Schwab Asset Management, in light of the growing number of investors attracted by the advantages of these exchange-traded funds, such as “low fees, tax efficiency, and liquidity.”
It would appear that 62% of investors already active in the ETF market are considering placing their entire portfolios in this type of fund over the next few years, with 66% focusing more on indices and 65% on assets.
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 Schwab Asset Management CEO David Botset. And why not with the new asset class represented by cryptocurrencies?
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 embrace cryptocurrencies
According to data from Schwab Asset Management, 94% of active investors in the ETF market believe that these funds help them reduce their portfolio costs. At the same time, nearly half say that they also allow them to “invest in targeted strategies separate from their long-term portfolio” (49%) or “access new asset classes” (46%).
But another piece of data also appears very promising: 45% of investors surveyed say they are considering investing in crypto ETFs in the coming year. This is the highest percentage, just behind U.S. stocks (52%) and on par with the bond market.
Once again, Millennials are leading the way in this area, with an ever-increasing interest in ETFs, which are seeing the fastest adoption. As a result, they appear to be the investors most likely to adopt a 100% ETF portfolio strategy.
There is a marked enthusiasm for what Schwab Asset Management describes as “specialized ETFs,” including crypto spot ETFs (44%) and single-stock ETFs (43%). When it comes to cryptocurrencies, the figures drop to 33% for Generation X and only 11% for baby boomers. These figures demonstrate the extent to which younger generations are establishing themselves as the main source of demand for crypto ETFs and niche financial products.
