Crypto ETF Shakeout Looms: Bloomberg Warns of Mass Liquidations by 2027
New York, NY – November 19, 2024 – Get ready for a potential bloodbath in the burgeoning world of crypto Exchange Traded Products (ETPs). Despite forecasts of over 100 new virtual asset ETPs hitting the U.S. market in 2026, a leading analyst is predicting a dramatic culling, with many expected to fail before 2027 due to a lack of investor interest. This is breaking news for anyone following the digital asset space, and a crucial signal for investors.
The Coming Flood – and Potential Drain – of Crypto ETPs
James Seifert, a Bloomberg Intelligence analyst, revealed his concerns in a report earlier today, echoing a prediction from Bitwise that anticipates more than 100 virtual asset ETFs launching in 2026. However, Seifert cautions that the sheer volume of new products, coupled with potentially weak demand, will likely lead to widespread liquidations. The U.S. Securities and Exchange Commission (SEC) currently has over 126 ETP applications pending, setting the stage for a crowded marketplace.
This isn’t just theoretical. The ETF world has a history of product failures. Last year alone, 622 ETFs were liquidated globally, with 189 closures occurring in the U.S. market. According to Morningstar data, liquidated U.S. ETFs lasted an average of just 5.4 years, often succumbing to insufficient assets under management (AUM) and sluggish capital inflow. We’re already seeing this play out in the crypto space with the Active Bitcoin/Ethereum Strategy ETF (ARKY) and the On-Chain Bitcoin Strategy ETF (ARKC), both launched by ARK Invest and 21 Shares, already initiating liquidation processes.
SEC Changes Fueling the ETP Boom – and the Risk
The anticipated surge in ETP approvals is largely due to the SEC’s introduction of ‘Generic Listing Standards’ in September 2023. This streamlined process allows ETPs to be listed if they meet specific requirements, bypassing individual SEC screening. While this accelerates innovation and access, it also opens the door for a flood of potentially unviable products.
Before this change, we saw asset managers already expanding beyond Bitcoin (BTC) and Ethereum (ETH) with ETFs tracking altcoins like Litecoin, Solana, and XRP. These followed the successful launches of spot Bitcoin and Ethereum ETFs earlier in 2024, which have demonstrated initial stability. In fact, the U.S. spot Bitcoin ETF has attracted a cumulative $57.6 billion since January 2024, while the spot Ethereum ETF has seen a net inflow of $12.6 billion since July 2024. Solana spot ETFs, launched in late October 2025, have reportedly garnered $725 million in inflows.
Bitcoin and Ethereum: The Likely Survivors
But Seifert’s analysis isn’t entirely pessimistic. He believes that while many ETPs will falter, the strongest products – those focused on Bitcoin and Ethereum – will thrive. “In the end, only top products centered on Bitcoin and Ethereum will survive, and the rest are likely to enter a phase of restructuring,” he predicts. This highlights the importance of focusing on established cryptocurrencies with proven track records and strong institutional support.
Evergreen Insight: The history of financial innovation is littered with examples of initial exuberance followed by consolidation. The dot-com bubble of the late 1990s and early 2000s serves as a stark reminder. While the potential of blockchain technology and digital assets is undeniable, not every project or investment vehicle will succeed. Due diligence, a focus on fundamentals, and a long-term perspective are crucial for navigating this evolving landscape.
This development underscores the need for investors to carefully research any crypto ETP before investing, paying close attention to AUM, trading volume, and the underlying assets. The coming years will be a critical test for the crypto ETP market, separating the wheat from the chaff and ultimately shaping the future of digital asset investment. Stay tuned to archyde.com for ongoing coverage of this breaking news and expert analysis to help you make informed decisions in the dynamic world of cryptocurrency. For more in-depth analysis on ETF strategies and market trends, explore our finance section.
