Since the launch of spot Bitcoin ETFs in the U.S. at the beginning of 2024, these investment vehicles have drawn in tens of billions of dollars.
Although the SEC also approved Ether ETFs last year, their demand has been noticeably weaker, raising questions about demand for non-Bitcoin ETFs.
Bitcoin ETFs Remain the Institutional Favorite
Experts in the financial and cryptocurrency markets anticipate that spot Bitcoin ETFs will continue to dominate the institutional investment space.
However, as the sector matures, other cryptocurrency-based ETFs—including those incorporating a variety of digital assets—are expected to gain more traction.
Adrian Fritz, Head of Research at 21Shares, highlighted the reasons behind Bitcoin’s enduring popularity, explaining that its clear value proposition makes it the preferred choice among investors.
“This cycle has clearly been centered around Bitcoin. As the most established crypto asset, it is widely seen as the safest choice, with a straightforward value proposition as digital gold, a well-defined regulatory status as a commodity, and strong institutional trust,” Fritz said in an interview with Crypto Intelligence News.
“Naturally, investors—especially institutions—feel more comfortable allocating to BTC over other crypto assets.
“While this trend may persist in the short term, we expect demand for non-Bitcoin products to grow over time.
“As investors become more familiar with the broader crypto ecosystem, they will start exploring opportunities beyond Bitcoin, leading to increased traction and momentum for diversified offerings.”
Institutional Demand for Bitcoin Extends Beyond the U.S.
Roxanna Islam, Head of Sector and Industry Research at VettaFi, echoed this view, pointing out that Bitcoin’s dominance is not limited to the U.S. market but extends worldwide.
“Bitcoin overall has significantly more demand than other cryptocurrencies–it holds approximately 60% of market share,” Islam told Crypto Intelligence News.
“When packaged into spot ETFs, that dominance is even higher due to retail preference for Bitcoin. While I think there will be demand for other spot crypto ETFs, it will still remain relatively lower than Bitcoin.
“This is similar to markets outside the U.S. where large suites of crypto ETPs are offered, yet Bitcoin ETPs are significantly more popular.”
Despite Bitcoin’s overwhelming presence, Islam believes that multi-token crypto ETFs could play a crucial role in diversifying investors’ holdings. However, she maintained that Bitcoin would likely continue to lead the market, as many retail investors see it as the primary gateway into crypto.
The Future of Crypto ETFs
While Bitcoin-based ETFs are expected to remain the dominant players, Fritz suggested that exchange-traded funds composed of multiple cryptocurrencies could eventually gain more traction. He drew parallels between traditional financial markets, where diversified investment vehicles such as index funds have grown in popularity.
“As long as it serves as the primary entry point for institutional investors, single-asset BTC products will likely maintain higher demand in the near term.
“However, as the crypto market matures, investor preferences may shift toward diversified exposure to altcoins beyond Bitcoin—much like in traditional finance, where index funds and sector ETFs are often preferred over single-stock investments.”
The expansion of the crypto ETF market is already visible in recent filings, which indicate a shift beyond spot products. Islam noted that new ETFs are increasingly aligning with trends seen in broader financial markets, incorporating features such as leverage and buffered protection.
“Filings for new crypto ETFs have extended beyond spot products and are following broader ETF trends including leveraged and buffered ETFs.
“It is likely that these trends will continue to align with the broader ETF market as the crypto ETF ecosystem grows more complex,” she concluded.
While Bitcoin ETFs currently dominate institutional and retail demand, the landscape of crypto ETFs is gradually evolving. As investors grow more comfortable with digital assets, alternative ETFs—whether single-asset or diversified—are likely to gain momentum, shaping the future of cryptocurrency investment.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
