Analysts forecast growth in crypto fund assets to $650 billion

Over the next five years, the assets under management by crypto funds could rise to $650 million as the market shifts from a ‘cottage’ stage to a regulated environment. This is according to a Bernstein brokerage firm report, CoinDesk reports.

Currently the assets under management by crypto funds stand at about $50 billion — only 4% of the digital asset industry’s total market capitalization (~$1.08 trillion at the time of writing).

The growth of crypto funds should be catalyzed by the launch of spot Bitcoin ETFs (ETF) based on Bitcoin, which would attract institutional investors. On July 14, the SEC began reviewing the corresponding applications from BlackRock, VanEck, Fidelity Investments, Invesco and WisdomTree. Subsequently, Franklin Templeton joined them.

Analysts say demand for the instruments will be driven by “investment advisers integrated into crypto-banking products, as well as easy access to ETFs through brokers.”

According to Bernstein’s calculations, Bitcoin and Ethereum funds will account for about 10% of the crypto market’s capitalization, while hedge funds will account for 5-6%.

“The adoption of digital assets in financial terms follows speculative cycles. We expect rapid growth, with 2024 set to be a landmark year for ETF approvals,” the analysts added.

Earlier, Bloomberg analysts James Seyffart and Eric Balchunas estimated the probability of launching a spot Bitcoin ETF by the end of 2023 at 75%. The experts raised the odds after the legal victory of Grayscale in its case against the SEC.

Earlier, former SEC attorney John Reed Stark ruled out the approval of a spot Bitcoin ETF. However, Bernstein signaled that the odds of a new wave of contenders are high.