- Crypto ETFs gained prominence with Bitcoin and Ethereum ETFs launched by major firms in 2024.
- As applications for altcoin ETFs are under review, crypto index ETFs are emerging as a new trend.
- Index ETFs offer a straightforward way to invest in major cryptos, mirroring traditional stock indexes.
- Grayscale’s latest ETF bid includes a mix of major cryptos, offering broad market exposure.
If there has been one narrative dominant in crypto over the past year or so – apart from memecoins and Trump, and of course Trump memecoins – it has to be crypto exchange-traded funds (ETFs).
Bitcoin and Ethereum made their debut in early and mid-2024 respectively, with the launch of several ETFs backed by industry heavyweights like BlackRock, Fidelity, and of course Grayscale. These ETFs track the price of their underlying digital asset and provide easy exposure for investors who are unable or unwilling to hold the assets themselves.
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In the meantime, several altcoins have also received applications for an ETF, which are now in front of regulators. But another trend has emerged in the crypto ETF sector: crypto Index ETFs.
Crypto Index Funds Next Hot ETF Topic, Says Expert
These funds are similar to an ETF that invests in the S&P 500 or the 200 largest companies of the ASX – just instead of companies, these funds invest in a selection of the largest cryptocurrencies.
Katalin Tischhauser, who is the head of investment research at crypto bank Sygnum, told Cointelegraph recently that Wall Street is keen on the idea:
The next logical step is index ETFs because indices are efficient for investors — just like how people buy the S&P 500 in an ETF. This will be the same in crypto.
Katalin Tischhauser, head of investment research at crypto bank SygnumEnter Grayscale: Earlier this week, they filed for an ETF offering exposure to the largest crypto assets: the Grayscale Digital Large Cap Fund (GDLCF). On April 1 they submitted an S-3 filing to the US Securities and Exchange Commission (SEC).
The fund, created in 2018, is not yet ‘exchange-traded’ and currently holds a basket of cryptocurrencies.
Bitcoin Largest Asset in Grayscale Index Fund
With GDLCF, investors get exposure to five cryptos, including Bitcoin with a 79.37% allocation, and also Ethereum (10.83%), XRP (5.79%), Solana (2.87%) and Cardano (1.14%).
Although the fund has suffered heavy losses over the past few months, with the overall market downturn, it has seen a cumulative price increase of 474.83% since its inception.
There are other index funds already with combined exposure to ETH and BTC. The SEC previously approved Hashdex’s Nasdaq Crypto Index US ETF and Franklin Crypto Index ETF for Nasdaq and Cboe BZX Exchange, respectively.
Related: BlackRock’s Larry Fink Warns: Bitcoin Could Challenge US Dollar’s Reserve Status
Meanwhile, the US spot Bitcoin and Ethereum ETFs continue to see mixed results. Data from Farside shows that BTC funds have seen US$218.4 million (AU$347.8 million) in net outflows this week so far, while Ether funds actually had net inflows of US$2.8 million (AU$4.45 million).
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