Key Takeaways
- Analysts predict over 100 new crypto ETPs will launch in 2026, following new SEC rules.
- A significant number of these funds are expected to fail and liquidate by 2027 due to insufficient investor demand.
- The trend mirrors the broader ETF market, where hundreds of funds close annually from a lack of assets.
- Success has so far been concentrated in funds for major assets like Bitcoin and Ethereum.
An Oncoming Deluge of Crypto Funds
Bloomberg Intelligence analyst James Seyffart has issued a stark warning for the burgeoning crypto exchange-traded product (ETP) landscape. While agreeing with predictions of over 100 new crypto ETFs launching in 2026, he forecasts a subsequent wave of closures. "We’re going to see a lot of liquidations in crypto ETP products. Might happen at [the] tail end of 2026 but likely by the end of 2027," Seyffart stated. He attributes this to a simple reality: "Issuers are throwing A LOT of product at the wall."
The Inevitability of Fund Attrition
This predicted shakeout is not unique to digital assets. The broader ETF industry sees constant churn. In 2023 alone, 244 U.S. ETFs were liquidated, with an average lifespan of just 5.4 years. The primary cause? A failure to attract enough capital and build sustainable assets under management (AUM).
This pattern is already emerging in crypto. This year saw the liquidation of notable funds like the ARK 21Shares Active Bitcoin Ethereum Strategy ETF (ARKY) and the ARK 21Shares Active On‑Chain Bitcoin Strategy ETF (ARKC).
Catalyst: The SEC's New Listing Standards
The anticipated flood of new products is directly linked to the U.S. Securities and Exchange Commission's (SEC) new generic listing standards, enacted in September. These rules streamline the approval process, no longer requiring a case-by-case review for each fund application. This has opened the gates for asset managers to file for ETFs tied to a wider, and often more speculative, range of crypto assets.
Current Market Leaders and New Challengers
To date, success has been heavily concentrated. Spot Bitcoin ETFs have drawn $57.6 billion in inflows since January 2024, while spot Ether ETFs have accumulated $12.6 billion since their July launch. Newer funds tracking assets like Solana (SOL) have seen more modest, but notable, interest, with several providers collectively gathering around $725 million since late October.
However, the coming wave will test whether investor demand exists for dozens of funds targeting smaller or niche tokens, potentially leading to a survival-of-the-fittest scenario where only funds with strong branding, liquidity, and track record endure.
"We’re going to see a lot of liquidations in crypto ETP products. Might happen at [the] tail end of 2026 but likely by the end of 2027." - James Seyffart, Bloomberg Intelligence Analyst
